Negotiations between South Korea and the United States over a landmark trade agreement have entered a decisive phase, with both sides expressing optimism that a deal could be finalized before the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju at the end of October 2025. This comes after months of painstaking talks, marked by complex disagreements over investment structures and the sensitive issue of foreign exchange stability.
On October 16, 2025, South Korea’s presidential policy advisor Kim Yong-beom voiced his "optimism" about the progress being made, signaling a positive shift after months of stalled discussions. According to Reuters, Kim, accompanied by Minister of Industry Kim Jung-kwan, was set to travel to Washington, D.C., to join the next round of negotiations. Their delegation also included Deputy Prime Minister and Finance Minister Koo Yun-cheol and Trade Minister Yeo Han-koo, highlighting the gravity Seoul places on reaching a deal.
Both countries had already agreed to use the upcoming APEC summit as a deadline to conclude their bilateral tariff negotiations, a move confirmed by South Korean trade chief Yeo Han-koo. Speaking to reporters before departing for Washington, Yeo stated, “Both sides are making progress toward finalizing details of Seoul’s $350 billion investment commitment under the July preliminary trade agreement.” This sentiment was echoed by U.S. Treasury Secretary Scott Bessent, who told the press that the two nations are “close to completing the trade deal,” though he acknowledged that some details remain unresolved.
The preliminary agreement, reached on July 30, 2025, set the stage for the United States to reduce import tariffs on South Korean goods from 25% to 15%. In return, South Korea committed to investing $350 billion in strategic U.S. industries. However, the devil, as always, is in the details. The reduction of auto import tariffs from 25% to 15%—a key point for South Korea’s powerful automotive sector—has not yet been implemented, as both countries continue to haggle over the structure and method of Seoul’s massive investment package.
Disagreements center on how the $350 billion should be delivered. According to VietnamPlus, South Korea has proposed that only about 5% of the total should be direct cash investments, with most of the remainder coming in the form of credit guarantees and loans. The U.S., however, is pushing for a much more straightforward approach: an upfront ‘blank check’ investment, similar to the $550 billion package Japan recently agreed to, where Washington retains full control over where the money is invested.
This demand has raised eyebrows in Seoul, where officials are wary of ceding too much control and exposing themselves to foreign exchange risks. To mitigate these concerns, the South Korean government has requested that Washington consider protective measures, such as an unlimited currency swap agreement, to help stabilize the won-dollar exchange rate. Furthermore, Seoul wants to maintain a reasonable ratio of direct investment and ensure it has a say in where its money goes—citing the principle of “commercial reasonableness.”
Minister Kim Jung-kwan, speaking at Incheon International Airport before his departure, described the prospects for the talks as “very positive.” He noted that misunderstandings and differences regarding foreign exchange market issues had “narrowed significantly.” The government’s full-court press was on display, with all key economic and trade officials mobilized to support the negotiations, including Deputy Prime Minister Koo Yun-cheol, who was also in Washington for meetings with U.S. Treasury officials and major international financial organizations like the G20, International Monetary Fund (IMF), and World Bank.
For South Korea, the stakes are high—not just economically, but politically. The government has made it clear that it will not accept an “unfair agreement.” As VietnamPlus reported, “South Korea insists on protecting national interests and will not accept an unfair agreement.” This resolve comes as Japan, a regional competitor, recently finalized a similar deal with the U.S., pledging a much larger $550 billion investment and securing its own tariff reductions.
The pressure to conclude an agreement is mounting, with both sides targeting the end of October 2025 to coincide with U.S. President Donald Trump’s planned visit to South Korea for the APEC summit. According to statements from both governments, there is a real possibility that a memorandum of understanding (MOU) on investment will be signed before the summit’s conclusion in Gyeongju. U.S. Treasury Secretary Scott Bessent told reporters he expects an official announcement within the next 10 days—a timeline that has financial markets watching closely.
Indeed, the anticipation of a breakthrough has already sent ripples through the markets. The Korean stock market responded with enthusiasm: the benchmark KOSPI index soared 1.9% to a record high on October 16, 2025. Automotive stocks, in particular, were buoyed by the prospect of tariff relief, with Hyundai Motor shares jumping 9.6%, the highest in a year, and Kia shares climbing 8% on the same day, according to Reuters. The market’s reaction reflects the high hopes pinned on the deal’s potential to boost South Korea’s export-driven industries.
Yet, challenges remain. The U.S. is holding firm on its demand for more direct investment and greater control over deployment, while South Korea is pushing for safeguards and greater say in how its funds are used. The structure of the investment package—whether more cash, more guarantees, or more loans—remains a sticking point. As Secretary Bessent candidly admitted, “The issue lies in the small details, and both sides are working hard to resolve them.”
With the APEC summit looming, negotiators are racing the clock. Both sides appear determined to avoid a repeat of earlier delays, which saw detailed talks stall even after the July framework agreement. The sense of urgency is palpable, not least because of the broader geopolitical and economic implications. A successful deal would not only deepen economic ties between Seoul and Washington but could also set a template for future trade arrangements in the region—especially as global supply chains continue to shift and competition with China intensifies.
As the final days of October approach, all eyes are on Gyeongju. Will the U.S. and South Korea bridge their differences and sign a historic trade and investment pact? Or will last-minute snags keep the agreement just out of reach? For now, the mood is hopeful, the stakes are enormous, and the outcome remains tantalizingly close.