Nearly a year after South Korea agreed to a $350 billion (approximately 469.4 trillion won) investment package in the United States, implementation delays are fueling mounting frustration within the U.S. government. Washington is reportedly pressing Seoul to accelerate capital deployment while simultaneously demanding South Korean participation in the Alaska liquefied natural gas (LNG) project.
The Financial Times (FT) reported on the 9th (local time), citing U.S. government sources, that “the South Korean government needs to pick up the pace,” warning that failure to do so “could trigger a backlash from President Donald Trump.” Another source told the FT that Trump’s recent public criticism of South Korea’s lack of support regarding the Iran conflict was partly driven by frustration over the investment delays.
Jennifer Lee, a partner at U.S. consultancy The Asia Group, noted that “unlike Japan, which has rolled out successive large-scale investment announcements, South Korea’s slow progress is breeding discontent within the U.S. government.”
Alaska LNG Emerges as a New Flashpoint
U.S. pressure is expanding beyond expediting existing projects to demanding participation in new ventures. South Korea’s Ministry of Trade, Industry and Energy recently raised the possibility of joining the Alaska LNG project during a closed-door briefing to the National Assembly on the progress of follow-up negotiations on the bilateral strategic investment framework.
A source from the National Assembly Strategy and Finance Committee said, “The gist was that nothing has been decided yet on whether to pursue the Alaska project — it could go either way depending on negotiation outcomes.” The source added, “The original position was to follow the feasibility study results since the project lacks profitability, but given how aggressively the U.S. is pushing, it’s difficult to keep repeating that line.”
The Alaska project is one of Trump’s signature policy priorities. The plan centers on transporting natural gas extracted from Alaska’s North Slope via an approximately 1,300-kilometer pipeline to a liquefaction facility near Anchorage, then shipping it to demand centers. However, the project has so far drawn widespread skepticism over its ability to secure profitability and demonstrate commercial viability.
Kim Jung-kwan, South Korea’s Minister of Trade, Industry and Energy, expressed reluctance last November, describing the project as “high-risk” during a National Assembly session. Despite this, Trump has repeatedly floated the possibility that South Korean and Japanese investment capital could be channeled into the venture.
South Korea’s investment commitment was made as part of last year’s bilateral trade agreement with the United States. In exchange for Washington reducing proposed tariffs on South Korean goods from 25% to 15%, Seoul agreed to invest a total of $350 billion in the U.S., including $150 billion in the shipbuilding sector and $200 billion in strategic investments.
The South Korean government has effectively designated the Encinal gas-fired combined-cycle power plant in Texas as its first investment project, with large-scale nuclear reactor construction as the second. Given that the Encinal plant could require $22 billion (approximately 29.5 trillion won) and eight large nuclear reactors could cost upwards of $120 billion, there are concerns that adding the Alaska project would push total commitments beyond the $200 billion strategic investment pool.
The South Korean government is reportedly engaged in last-minute negotiations to ensure actual capital deployment does not exceed the limits of the U.S. Investment Fund. The Ministry of Trade, Industry and Energy stated that “under the strategic investment memorandum of understanding (MOU), total U.S. investment will not exceed $200 billion under any circumstances, and annual remittance limits will not surpass $20 billion (approximately 26.8 trillion won).”
The investment program is gradually moving toward execution. The government is expected to announce the U.S. investment projects on the 18th, with the possibility that an initial capital transfer estimated at around $2 billion (approximately 2.7 trillion won) could be remitted to the United States by month-end. However, the Ministry of Trade, Industry and Energy cautioned that “specific investment targets, announcement timing, and the size and schedule of the first capital transfer have not been finalized.”
The Rationale for Caution and Variables in the Alliance
Several factors are driving South Korean companies’ cautious approach to U.S. investment. The FT noted that a raid by U.S. Immigration and Customs Enforcement (ICE) last September on a joint battery plant operated by Hyundai Motor Group and LG Energy Solution in Georgia dampened investment sentiment among South Korean firms. The immigration enforcement action contributed to hesitation over committing capital to the United States.
Min Jung-hoon, a professor at the Korea National Diplomatic Academy, said, “Companies won’t invest in projects without economic merit, so the government has no choice but to be cautious.” He added, “On the other hand, President Trump wants quick results, so the two sides’ positions are diverging.”
Experts warn that the delay in investment announcements could create a perception in Washington that Seoul is trying to avoid fulfilling its commitments. With Trump facing midterm elections in November and needing to showcase foreign investment inflows as a policy win, pressure is expected to escalate further.
The FT noted that the investment issue is deeply intertwined with other security matters in the U.S.-South Korea relationship, citing Trump’s directive to scale back joint military exercises. Ramon Pacheco Pardo, a professor at King’s College London, suggested that “Trump could reverse last year’s agreement to support South Korea’s nuclear-powered submarine ambitions or once again play the troop withdrawal card to strengthen his negotiating position.” He added, “The foundations of the U.S.-South Korea alliance are solid, but given Trump’s transactional view of alliances, the relationship could remain volatile throughout his presidency.”