Inside the government ministries that led the investment negotiations, however, a sense of urgency prevails that "the game isn't over yet." Only a broad outline of the overall investment projects has emerged, with far more negotiations still to come.
Indeed, the U.S. is shaking the rules of the game by unilaterally announcing terms that were never agreed with Seoul. Speaking at the White House on Sept. 30 local time, President Donald Trump unveiled the investment package — including a liquefied natural gas (LNG) combined-cycle power plant in Encinal, Texas, construction of eight large nuclear reactors in the U.S., and the Alaska LNG project — and said, "The Alaska investment will be more than $50 billion." That figure was not included in the fact sheet jointly released by the two countries. President Lee Jae-myung immediately pushed back on X, formerly Twitter, writing that "among the investment projects announced by the U.S., the Alaska LNG project will proceed only on the premise that its commercial viability is confirmed and that it complies with the Republic of Korea's legal procedures."
Woo Suk-jin, an economics professor at Myongji University, voiced concern, saying, "The U.S. has already publicly stated things that were never agreed. The negotiations ahead carry many burdens."
After Trump's official announcement, Industry and Trade Minister Kim Jung-kwan told reporters, "Today's announcement is not the end but rather a new beginning." Only the broad framework of the massive investment program — worth 272 trillion won — has been set, and considerable knots remain to be untied as details are filled in and the projects are operated.
Experts likewise agreed that Seoul must devote intense effort to maximizing the national interest in the negotiations to come. Kim Tae-hwang, a professor of international trade at Myongji University, said, "The investment projects in the U.S. are highly susceptible to shifts in the U.S. political and policy environment. Given future uncertainty, it might have been better to leave some of the investment funds in reserve, as Japan did, rather than using the entire investment ceiling at once." Unlike South Korea, which disclosed its full $200 billion ceiling at once, Japan has left more than 80% of its total committed investment of $550 billion unallocated.
Jang Sang-sik, head of the Korea International Trade Association's Institute for International Trade, also noted that Trump deliberately highlighted the Alaska LNG project with the November midterm elections in mind. "In the detailed negotiations, it is important not to be dragged along by the U.S. political calendar, but to scrutinize commercial rationality and the terms of participation for Korean companies," he advised.
The immediate challenge is whether the projects already on the table can sustain a high level of commercial rationality for decades. LNG combined-cycle plants typically operate for 40 years, and large nuclear reactors for more than 60. If the Alaska LNG project takes shape, it would effectively have to continue until the gas fields are depleted.
A ruling-party official said, "Isn't it possible that new technology emerges decades from now to replace LNG and nuclear power? We need to build proper governance to carry these projects through over the long term." An energy industry official likewise noted, "No one can accurately forecast global LNG prices or U.S. retail electricity prices, which have a huge impact on profitability. Commercial reviews are done in advance; actually running the business is another matter entirely."
Another problem is that in advanced economies such as the U.S., permitting and local opposition create substantial uncertainty for large infrastructure projects. Professor Kim said, "The likelihood that construction costs rise and schedules slip is quite high. Even if we don't have to pay more, what happens if the economics of the project itself deteriorate and the payback period lengthens?" Another government official said, "In the worst case, we have to draw up plans that contemplate liquidating a project."
The investment funds, to be disbursed at up to $20 billion a year, are also expected to remain a persistent source of instability in the foreign exchange market over the next decade. The government maintains it can fully fund the costs from returns on foreign exchange reserves and from up to $7 billion a year in bonds issued overseas by the Korea-U.S. Strategic Investment Corp., but it will be hard to avoid affecting the bond and currency markets in some form. Woo Suk-jin of Myongji University said, "The investment funds must be deployed in a way that does not weaken the policy tools needed to defend the won or foreign exchange liquidity. The environment has recently been shifting toward higher interest rates, and the resulting rise in funding costs is also a concern."
Negotiations over the $150 billion MASGA (Make American Shipbuilding Great Again) initiative have yet to begin in earnest. Large-scale nuclear construction and the MASGA investment are also entangled with security talks. The government is coordinating with Washington over expanded uranium enrichment rights and the construction of a nuclear-powered submarine, and the details of the MASGA deal could be filled in through that process. Options under discussion include building U.S. warships alongside South Korea's nuclear submarine, or increasing imports of U.S. nuclear fuel in exchange for permission to enrich. In the joint fact sheet released after last year's summit between the two presidents, shipbuilding and nuclear energy were also bundled together with warships, enrichment and nuclear submarines under "strengthening the maritime and nuclear partnership."
Semiconductor capital spending is another area where the U.S. could ratchet up pressure. For now, the $200 billion investment ceiling is already fully allocated, leaving no room for chip facilities, but Washington still appears to want greenfield investment by Korean companies. With sectoral tariffs on semiconductors still undecided, the U.S. could use that as leverage to press companies for investment.
A senior business executive said, "This investment package only secured a promise not to raise the general 15% tariff further. If they use semiconductor sectoral tariffs as a weapon to demand memory investment, the entire country could sink back into Trump's quagmire." Observers also say Trump could apply various forms of political pressure even after the midterms, making it essential to prepare a negotiating strategy in advance.
