South Korea’s Rival Parties Rush Bill to Channel Up to $350 Billion in U.S. Investment as Tariff Deadline Looms

SEOUL, South Korea — South Korea’s rival parties agreed Tuesday to rush through a special law that would help send as much as $350 billion of Korean investment to the United States, a move lawmakers openly linked to U.S. threats to keep 25% tariffs on Korean exports in place.

Floor leaders from the ruling Democratic Party of Korea and the conservative People Power Party set a timetable to complete committee work on the “Special Act on Investment in the United States” by March 9 and bring it to a final vote at a National Assembly plenary session on March 12. Both parties say they will back the bill.

The legislation is designed to implement a previously signed Korea–U.S. trade and investment arrangement that ties lower U.S. tariffs on Korean goods to large-scale Korean investment in American factories and infrastructure. President Donald Trump and senior U.S. officials have indicated that higher tariffs will remain until Seoul enacts the law.

Cheon Jun-ho, a senior Democratic Party floor official helping steer the bill, said the bipartisan deal was aimed at easing mounting economic anxiety.

“We will resolve economic uncertainty one by one,” he told reporters at the Assembly, thanking the opposition for agreeing to the accelerated schedule.

A law to unlock a $350 billion pledge

At the center of the debate is the “Special Act on Strategic Investment Management of South Korea and the United States,” commonly shortened in English to the Special Act on Investment in the United States.

The bill provides the domestic legal framework for a Korea–U.S. “Strategic Trade and Investment Deal” sealed late last year. Under that arrangement, South Korea has pledged up to $350 billion in U.S.-bound investment over a multiyear period in exchange for a ceiling on many U.S. tariffs on Korean exports, particularly autos and industrial goods.

According to government descriptions of the deal, the commitment includes $200 billion in cash investments, capped at $20 billion per year, and about $150 billion in shipbuilding and related industrial cooperation. In return, the United States is expected to cap tariffs on a wide range of Korean products at about 15%, lower than rates applied under Trump’s broader “reciprocal tariff” regime.

To deliver on those promises, the bill would create a new Korea–U.S. Strategic Investment Corporation, a state-linked vehicle separate from the existing Korea Investment Corporation sovereign wealth fund. While KIC focuses on financial investments, the new entity would specialize in project-based, greenfield investments such as U.S. plants, terminals and energy infrastructure.

Early plans for a larger institution have been scaled back. Lawmakers narrowed initial paid-in capital from 5 trillion won to 2 trillion won, and officials now describe it as a “mini-organization” with fewer than three directors and roughly 50 staff, in an effort to ease concerns about bureaucratic expansion.

The bill also sets up what the government calls a “triple safety net” for risk management: a Risk Management Committee inside the new corporation, a Project Management Committee at the Ministry of Trade, Industry and Energy, and an Operations Committee at the Ministry of Economy and Finance.

Tariffs as leverage

The push to pass the law follows months of pressure from Washington.

In January, Trump publicly threatened to raise tariffs on imports from South Korea, accusing Seoul of dragging its feet on legislation needed to implement the investment deal. Around the same time, Treasury Secretary Scott Bessent told CNBC that South Korea would continue to face 25% tariffs until the National Assembly approved the bilateral agreement — comments widely interpreted in Seoul as a direct ultimatum to pass the Special Act.

Opposition lawmaker Yoo Sang-beom, a senior deputy floor leader for the People Power Party, said Korean companies have been alarmed.

“If handling of the special law is delayed, corporations are very worried about the possibility of trade retaliation,” he said, arguing that passage is needed to remove uncertainty over Korea–U.S. tariffs.

Tariffs on Korean autos and auto parts are a particular concern. While the European Union and Japan have already secured lower rates, many Korean vehicles entering the U.S. are still subject to 25% duties under Trump’s reciprocal tariff policies. Korean automakers see a reduction toward 15% as critical to restoring their competitive position.

The legal environment in Washington has grown murkier. In February, the U.S. Supreme Court struck down key parts of Trump’s sweeping global tariff program. The administration has signaled it will rely more on targeted tools such as national security and trade enforcement statutes to sustain pressure, and has already lifted a blanket U.S. import tariff to 15% under remaining authority. Korean officials say that uncertainty has increased the urgency of locking in a specific bilateral arrangement.

Business lobby pressure and a key compromise

South Korean business groups have urged lawmakers to move quickly. On March 3, six major economic organizations, including the Korea Chamber of Commerce and Industry and the Korea International Trade Association, issued an “emergency appeal” calling for the Special Act to pass the Assembly’s special committee by March 9.

They warned that “the longer the National Assembly delays the Special Act, the weaker [Korea’s] bargaining power becomes” and the higher the risk that exporters will confront steep U.S. tariff measures.

One of the most contentious issues in drafting the bill has been how much direct control Parliament should retain over individual investments. Early versions would have required prior National Assembly approval for large projects. The final compromise drops that requirement in favor of post-hoc reporting.

Park Soo-young, who manages the bill for the People Power Party on the special committee, said in a public briefing that mandatory prior approval for each major investment “could slow investment execution,” adding that “switching to a reporting system is more realistic.”

Some lawmakers in the ruling party had argued for tighter parliamentary oversight, citing the sheer scale of the outbound commitments and potential impacts on national debt and foreign exchange reserves. The government has also been cautious about structuring the new fund in a way that would not automatically swell headline public debt or lock it into rigid budget planning rules.

Massive outflows, domestic unease

The numbers involved are unprecedented for South Korea, whose economy remains heavily dependent on exports and sensitive to capital flows.

Even at the agreed cap of $20 billion per year in cash investment, senior finance officials have acknowledged the risk that sustained outflows could put downward pressure on the won and complicate reserve management. Labor groups and some progressive lawmakers have raised concerns that state-backed capital could be used to build factories and infrastructure abroad instead of supporting jobs and innovation at home.

Critics are also wary of what they see as diluted democratic oversight. The new layers of internal and ministerial committees are designed to vet projects and monitor risks, but they operate largely within the executive branch. The shift from prior parliamentary consent to simple reporting is likely to face scrutiny as details of initial projects emerge.

Candidate projects already under discussion between Seoul and Washington, according to people familiar with the talks, include construction of a liquefied natural gas terminal in Louisiana, exports of Korea’s APR1400 nuclear reactors to the United States and upgrades to portions of the U.S. power grid using Korean equipment.

A test case for allies

For South Korea, the March 12 vote is the culmination of months of difficult bargaining: trading headline-grabbing investment pledges for more predictable access to the U.S. market at a time of rising global uncertainty, from tariff wars to tensions in the Strait of Hormuz.

It is also being watched closely in other capitals. Trump’s use of tariff threats to accelerate passage of a specific foreign law — and Seoul’s decision to comply — may serve as a template for future U.S. negotiations with allies in Europe and Asia.

If lawmakers approve the Special Act on schedule, attention will quickly shift to Washington: whether the administration follows through with the promised tariff relief, how swiftly the new investment corporation is set up, and which U.S. projects are chosen to absorb the first wave of Korean capital.

For now, South Korean legislators across the aisle appear to have concluded that the costs of delay outweigh the political risks of acting. The law they are poised to pass will tie a significant share of the country’s future overseas investment to a single bilateral deal — and to the shifting course of U.S. trade policy.