[Gyeongju APEC] Lee and Trump Meet Again: Pivotal Moment for Tariff Negotiation Breakthrough

Breakthrough Sought in Prolonged Deadlock
Disagreements Over $350 Billion U.S.-Bound Investment
Stalemate on Cash, Loan, and Guarantee Ratios
Attention on Possible Top-Down Resolution by Leaders
Dramatic Deal Could Ease Uncertainty...

President Lee Jae-myung and U.S. President Donald Trump, who is on a state visit to Korea, will meet on the 29th. The key issue is whether the two leaders can find common ground in the tariff negotiations, which have been at a stalemate for more than two months. The two countries have struggled to narrow their differences regarding the cash investment ratio and management methods of Korea's investment funds in the U.S., making the possibility of a dramatic breakthrough that would resolve all trade and security issues unlikely.

Yonhap News

According to the presidential office, President Lee and President Trump will hold a summit meeting at the Gyeongju National Museum on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in the afternoon. This marks the shortest interval between mutual visits with the U.S., coming about two months after their previous summit in Washington at the end of August.

The main focus is whether the tariff negotiations will be concluded. While the two countries have reached agreement on most details regarding Korean investment in the U.S., they remain divided on "one or two key issues." These include how to allocate the 350 billion dollars (approximately 500 trillion won) investment among cash, loans, and guarantees; whether the investment will be made in a lump sum or in installments; how to distribute the returns from the investment; and the extent to which financial safety nets to absorb foreign exchange market shocks will be formalized in documents.

There is speculation that Kim Yongbeom, Policy Chief at the Presidential Office, and Howard Lutnick, U.S. Secretary of Commerce, will continue negotiations right up until the APEC summit. Although the presidential office maintains that nothing has been decided, if these talks do occur, they would represent the final high-level negotiations before the summit. There is also a possibility that the two leaders could resolve the remaining issues through a "top-down" approach, given that working-level officials have struggled to reach agreement.

If a dramatic agreement on tariffs is reached, it is expected to reduce uncertainties in trade and the foreign exchange market, and significantly ease the burden on automobile, parts, and steel companies. This would also further reinforce President Lee's pragmatic, national interest-focused diplomatic approach.

In this case, the announcement could cover not only tariffs but also security issues between Korea and the United States. The two countries achieved significant consensus on security during the previous Washington summit. They reaffirmed Korea's gradual increase in defense spending, and there is talk of linking the purchase of U.S. weapons and supply chain cooperation to "economic security." In particular, discussions have taken place on revising the Korea-U.S. nuclear agreement to grant Korea greater authority over uranium enrichment and spent fuel reprocessing. Some of these points have already been formalized in documents.

However, it will not be easy to make a meaningful announcement. The U.S. has accepted the Korean negotiation team's argument that a large-scale, short-term foreign currency investment could trigger a serious economic crisis in Korea. Nevertheless, the U.S. reportedly maintains its position that Korea should invest 25 billion dollars in cash annually for eight years, totaling 200 billion dollars. The Korean side is said to have proposed a cash investment of 7 billion dollars per year over ten years, totaling 70 billion dollars. The gap remains wide, as the U.S. is demanding more than half in cash, while Korea is offering around 20 percent.

President Lee Jae-myung is delivering the keynote speech at the 2025 Asia-Pacific Economic Cooperation Chief Executive Officer Summit (APEC CEO SUMMIT) held at the Hwarang Hall of the Gyeongju Arts Center in Gyeongbuk on the morning of the 29th. 2025.10.29 Photo by Kang Jinhyung

Furthermore, the presidential office has stated that there will be no separate announcement of only the agreed-upon portions between Korea and the U.S. during APEC. While the Korean government is trying to make a separate announcement at least in the security area, the U.S. hopes to release both tariff and security agreements together. As a result, the possibility of a "no deal" outcome, in which no agreement is reached on either tariffs or security, cannot be ruled out.

President Lee also indicated he would not be constrained by the APEC summit timeline. In an interview with Bloomberg published on the 26th, President Lee said, "Investment methods, investment amounts, timetables, and how we share losses and distribute dividends-all of these remain issues." However, he added, "Talks are ongoing, and while there are some differences of opinion, a delay in the tariff negotiations does not necessarily mean failure."