South Korea says $350 billion U.S. investment unlikely to begin in H1

Finance Minister Koo Yun-cheol says Seoul’s landmark USD 350 billion investment pledge into strategic U.S. industries is unlikely to begin disbursing in the first half of 2026, casting fresh uncertainty over a flagship bilateral arrangement designed to reshape supply chains and trade ties.

The commitment, unveiled under a Memorandum of Understanding published Oct. 29, 2025, targets shipbuilding, semiconductors, nuclear power, secondary batteries and biotech. It is paired with a complementary pledge by South Korea to purchase USD 100 billion in U.S. energy products. The MoU sets a phased structure that limits Korean funding to up to USD 20 billion per year and requires that all investment commitments be made before Jan. 19, 2029. It also establishes joint committees and U.S.-led governance to select and manage investments.

The pause in pilot disbursements highlights a central practical constraint in the MoU: even at maximum annual funding, the framework precludes rapid, large-scale capital flows. The gap between headline numbers and the MoU’s annual cap means the USD 350 billion figure functions more as a long-range strategic envelope than a short-term infusion. That framing has important implications for U.S. industries expecting near-term projects and for global investors watching industrial-policy competition between governments.

The investment package is intertwined with tariff concessions negotiated over 2025. The U.S. issued an executive order on July 31, 2025 reducing reciprocal tariffs on certain Korean imports to 15%, effective Aug. 7, 2025. On Oct. 29, 2025, Seoul announced additional tariff reductions for Korean exports to the U.S., naming semiconductors, wood products and pharmaceuticals among affected categories, and described safeguards intended to limit foreign-exchange impacts. Public documentation from the White House beyond the Oct. 29 MoU has not been released.

Policy analysts say the arrangement exemplifies a broader shift toward state-directed, cross-border industrial policy in which governments couple market opening with coordinated public capital to strengthen strategic sectors. The Seoul pledge, with its specified sectors and the energy-purchase component, is explicitly designed to cement industrial linkages while smoothing political acceptance of tariff concessions. The finance minister’s announcement that the pilot phase will not begin in H1 raises questions about operational readiness: how joint committees will make investment choices, how U.S.-led governance will function in practice, and how Seoul will manage exchange-rate and fiscal implications of large external commitments.

For U.S. firms and state actors, the key near-term issues are timing and specificity. Will pilot projects be narrowed to fit the USD 20 billion annual cap? Are the USD 100 billion energy purchases contingent on disbursement milestones or separate commercial contracts? Seoul’s statement does not provide an alternative timeline, leaving both governments to clarify when project selection and capital flows will move from planning to execution.

What happens next will shape market expectations for semiconductors and energy supply chains and test whether a high-dollar, phased state commitment can be translated into concrete industrial outcomes without immediate large-scale disbursements. Observers will be watching for further government releases detailing committee composition, governance rules and any revised schedule for pilot and full disbursements.