SEOUL – In a significant legislative move, South Korea’s parliament approved a law on Thursday aimed at executing a $350 billion investment commitment in the United States. This pledge, originally made last year, was part of an effort to avoid the steepest tariffs imposed by the Trump administration.
The urgent push for the bill’s passage came from government officials who have been emphasizing its importance since its introduction in November. This urgency stems from growing uncertainties impacting South Korea’s trade-reliant economy, which is already grappling with President Donald Trump’s protectionist policies and the potential repercussions of his administration’s actions in Iran.
The approval of this legislation coincided with the Trump administration’s announcement of a new trade investigation. This inquiry targets manufacturing practices in various countries, including South Korea, Japan, and China, and could lead to fresh import taxes if these practices are deemed unjust by U.S. officials.
President Trump and his administration have been transparent in their intentions to leverage new tariffs as a means to recover lost revenues, following the U.S. Supreme Court’s decision to strike down his tariffs imposed under emergency powers.
The newly passed South Korean law, which was approved by a significant majority of 226 to 8, mandates the creation of a public corporation. This entity will be responsible for overseeing the pledged U.S. investments, carefully selecting projects in collaboration with trade authorities from both countries.
Despite the bill’s passage, some lawmakers voiced their discontent in the lead-up to the vote. Their concerns centered around Trump’s renewed trade investigations and the looming impact of Middle East tensions, which have highlighted South Korea’s economic vulnerabilities related to its heavy reliance on exports and imported energy resources.
“We cannot be the money machine Trump wants us to be,” said Son Sol, a member of the minor opposition Progressive Party. She said the bill does not give the legislature sufficient power to review and reject investments that could go against South Korean business or public interests.
Following months of tense negotiations, South Korea finalized an agreement with the United States in November to invest $200 billion in U.S. semiconductor and other high-tech industries and another $150 billion in shipbuilding in exchange for Washington lowering reciprocal tariffs on Seoul from 25% to 15%.
The agreement, which followed a breakthrough at an October summit between Trump and South Korean President Lee Jae Myung, also caps South Korean investments at $20 billion a year to protect the country’s foreign currency reserves.
Lee’s liberal Democratic Party introduced the legislation in November but faced resistance from opposition lawmakers worried about the economic impact. The legislative holdup frustrated Trump, who in January threatened to raise tariffs on South Korean autos, pharmaceuticals and other goods back to 25%, increasing pressure on the opposition to move the bill forward.
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