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Dealmakers across the Pacific set their sights on Korea

Published: 01 Dec. 2025, 00:01

Lee Ha-kyung

The author is a senior columnist at the JoongAng Ilbo.

Under the tariff agreement reached on Nov. 14, Korea must send $20 billion in cash to the United States every year for the next decade. Spending decisions will be made by U.S. Commerce Secretary Howard Lutnick, chair of the investment board, after hearing Korea’s views. The final decision, however, rests with President Donald Trump. Together, the two men are positioned to draw from Korea’s $420 billion in foreign exchange reserves, including roughly $15 billion in annual investment earnings and proceeds from foreign-currency bond issuances. Critics warn that Korea could be left without sufficient reserves to stabilize the won in times of volatility. Many in Seoul view the arrangement as economically unsound.

A demonstrator holds a sign in front of Trump International Hotel and Tower, as people gather for a ″No Kings″ protest against U.S. President Donald Trump's policies, in Chicago, Illinois, on Oct. 18. [REUTERS/YONHAP]

Capital outflows from Korea, driven by overseas stock investment and corporate direct investment, are expected to reach $110 billion this year. The exchange rate is threatening the upper 1,500-won level, and import prices continue to rise. If the government’s large-scale U.S. investment fails to produce returns, the economic consequences could be severe. The ideal scenario is one where the funds support profitable projects that strengthen the U.S. economy, return principal and earnings to Korea, and ultimately enhance Korea’s industrial competitiveness. That is possible but not assured.

The convoy of U.S. President Donald Trump leaves his Mar-A-Lago social club in Palm Beach, Florida, on Nov. 29. [REUTERS/YONHAP]

Understanding Trump and Lutnick is critical. Trump rarely begins his workday at the White House before 11 a.m., and his first official events typically started a little after noon. In 2017, his first year in office, the average was 10:31 a.m. His official events for the year have dropped by 39 percent, from 1,668 between Jan. 20 and Nov. 25 in 2017 to 1,029 this year. He remains, however, highly active in his private business. During the first six months of his current term, he visited his own properties nearly 100 times. According to the New York Times, the Trump Organization operates more than 22 real estate projects across at least 10 countries, where foreign governments and interest groups have hosted events that directed millions of dollars into Trump family accounts. The New Yorker magazine reported that Trump earned $3.4 billion through various deals after entering the White House in 2017. His Cabinet is stocked with billionaires and Wall Street alumni, and concerns about conflicts of interest appear minimal.

Lutnick’s background also raises questions. His firm, Cantor Fitzgerald, lost 658 employees in the Sept. 11 attacks, but he rebuilt the company into one employing more than 13,000 people. He also oversaw BGC Partners and the real estate brokerage Newmark. Lutnick has repeatedly pressed foreign governments to finance U.S. data centers. The concern is that over the past year, Newmark has signed more than $25 billion in data center deals. His son, Brandon Lutnick, who now helps run their business interests, boasted that they were having “the best year ever.” Meanwhile, Toby Neugebauer — who co-founded an energy company with former U.S. Energy Secretary Rick Perry — reportedly approached Lutnick’s other son, Kyle, seeking access to Korea’s $350 billion investment pool. The New York Times described him as having “coveted” the money. Lutnick has said he transferred ownership of his business to his children to avoid ethical conflicts, but filings show the transfers had not been completed as of early October. Even within the Commerce Department, concerns have been raised.

If Trump and Lutnick operate chiefly as businessmen guarding their own interests, Korea faces a serious risk. Should they pressure Korea to deploy its foreign reserves toward unviable projects, a foreign-exchange crisis becomes a plausible future. Negotiators who championed the deal would face public condemnation, and the Lee Jae Myung administration could suffer deep political damage.

One senior Korean official involved in the negotiations described the challenge this way: when Japan’s former Prime Minister Shigeru Ishiba sidelined the Foreign Ministry and delegated negotiations to Economy Revitalization Minister Ryo-sei Akazawa, Tokyo ended up with unexpectedly weak terms. Japan learned from that experience. With stronger economic capacity and clearer institutional safeguards — such as the Export-Import Bank Act, which bars unprofitable overseas investments — Japan can filter unreasonable demands at the negotiation stage. Korea lacks such internal protections and must build them from scratch, requiring close cooperation with the National Assembly.

U.S. Secretary of Commerce Howard Lutnick and Korean President Lee Jae Myung participate in a Korea-U.S. business roundtable at The Willard Hotel in Washington on Aug. 25. [REUTERS/YONHAP]

The warning signs are already visible. The real value of the Korean won has fallen to its lowest level since the Global Financial Crisis, signaling weakened confidence. The government’s plan to invest $200 billion in the United States over 10 years has amplified market anxiety. Officials have even suggested using the National Pension Service to help stabilize the currency. If the $20 billion per year that should serve as Korea’s buffer is instead absorbed by powerful dealmakers across the Pacific, the economic fallout would be severe.

Despite these risks, Korean politics remains consumed by factional conflict. While domestic tensions escalate, external financial threats continue to gather force. For many Koreans, the situation feels like facing a foreign-exchange tsunami with no political leadership focused on the danger.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.