Trump Tariffs Begin to Squeeze South Korean Electronics Giants (Image supported by ChatGPT)
SEOUL, Oct. 22 (Korea Bizwire) — As negotiations over tariff reductions and investment pledges continue between Washington, Seoul, and Tokyo, The Wall Street Journal has cast doubt on the scale and practicality of the enormous investment commitments reportedly sought by the Trump administration.
In an editorial published Tuesday, the paper warned that the administration’s demand — $350 billion from South Korea and $550 billion from Japan — in exchange for lower U.S. tariffs “raises serious questions about American governance and the power of the purse.”
President Trump is pushing the two Asian allies to make the investments through government-to-government channels rather than private corporations, the WSJ said, describing the arrangement as a de facto sovereign wealth fund operated without congressional approval.
The funds would reportedly be directed into strategic sectors such as metals, energy, artificial intelligence, and quantum computing, with spending controlled directly by the U.S. president and his deputies.
The Journal cited analysis by Piper Sandler noting that South Korea’s proposed $350 billion pledge would amount to 6.5 percent of its GDP over the remaining three years of Trump’s term, while Japan’s promise equals about 4.4 percent of its GDP annually through 2028. “Where are they going to come up with the money?” the editorial asked, adding that both nations already spend a smaller share of GDP on defense — 2.3 percent for South Korea and 1.8 percent for Japan.
It also questioned the political feasibility of the plan, particularly for Japan’s new prime minister, who leads a minority government, and for South Korean officials who must justify such spending to voters and the opposition-led parliament.
Beyond financial concerns, the WSJ warned that the unprecedented size and opaque nature of the funds could lead to mismanagement or corruption. Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent, the paper said, could face “enormous political pressure to invest in ventures run by friends of the president and the Republican Party.”
The editorial concluded that there is “no American precedent for giving hundreds of billions of dollars to the president to invest however he sees fit,” criticizing the use of unilateral tariffs to extract such payments from allied nations. It added that if a Democratic administration had proposed a similar plan, Republicans “would be crying foul and holding hearings — and rightly so.”
M. H. Lee (mhlee@koreabizwire.com)