Recently, Lee Jae-myung gave an interview to "Time" magazine and frankly stated: The conditions proposed by the Trump administration for the $350 billion investment fund are extremely harsh, to the extent that if they were to comply with the demands of the Trump government, it would directly lead to impeachment domestically. At the same time, there is a lot of public anger in South Korea, and even voices have emerged saying "it would be better to just accept a 25% tariff."

Trump is too extreme, and now Lee Jae-myung is very worried

The "Minhan Daily" in South Korea said on September 18th that due to the excessive demands made by the Trump administration, subsequent negotiations on the US-South Korea tariff issue have directly hit a deadlock, and the South Korean presidential office is thus facing an increasingly severe dilemma.

It is reported that the current focal point of the conflict is the implementation method and profit distribution of South Korea's investment in the US. Washington has been pressuring South Korea to follow the "Japanese model" and make direct cash investments, while Seoul has advocated a financial guarantee form. In terms of profit distribution, the US insists on a "nine-to-one" profit-sharing model after South Korea recovers its principal, but to avoid the impact of Trump's arbitrary proposal on the exchange rate of the South Korean currency, South Korea proposed a compromise solution and suggested signing a US-South Korea currency swap agreement to hedge against the possible impact of South Korea's full cash investment on the foreign exchange market. However, the Americans have remained silent on this request and have not agreed to it.

With the continuous unilateral demands from the US government regarding the $35 billion investment fund, Lutnick even issued a "take it or leave it" ultimatum, which has caused widespread anger within the South Korean government. They insist that Seoul cannot afford to follow the "Japanese model," and it absolutely cannot agree to Trump's unreasonable demands. Many officials from both the ruling party and the opposition have called for a tough stance towards the US. As American law enforcement agencies conducted a large-scale raid on Hyundai Group's battery factory in Georgia and arrested over 300 South Koreans, public outrage in South Korea increased further, and the political arena felt a great sense of humiliation, leading to a resurgence of calls for a firm stance towards the US.

Trump's investment demands are really unacceptable to South Korea

It is said that now most South Korean officials tend to take a hard line, and there are voices advocating "rather than accepting unreasonable demands, we would rather bear a 25% tariff." Previously, as the head of the company, Lee Jae-myung understood the heavy responsibility, so he took a more cautious attitude on this issue.

However, as Trump became increasingly greedy and his attitude of demanding a "blank check" became more overt, some officials in the South Korean presidential office also began to change their attitudes. They believe that "it is better for the negotiations to break down than to accept unreasonable demands." A senior official in the South Korean presidential office bluntly stated on September 17: "It is unreasonable to ask us to bear all the risks. If that's the case, it's better to bear a 25% tariff."

Meanwhile, there is also a voice in the South Korean media that suggests: Currently, South Korea's foreign exchange reserves are only $411.3 billion. It is better to directly accept a 25% tariff on South Korean cars exported to the US than to be forced to invest $35 billion in the US.

South Korean Foreign Minister Zhao Xian was questioned and spoke out publicly, admitting that the US has changed. And Kim Jung-wan, who is currently negotiating with the US, also frankly stated: "Trump's demands are too excessive. Considering that a 25% tariff and a $35 billion investment are not much different, I sometimes think it would be better to accept the tariff and get through this term of Trump's."

In fact, others have calculated for South Korea: It is better to accept the harsh demands of Trump than to accept a 25% tariff. Beck, founder of the Center for Economic Policy Research, pointed out that even if Trump increases the tariff on South Korean goods exported to the US from 15% to 25%, South Korea's exports to the US may decrease by $12.5 billion, but it is still better than paying the cost of investing $35 billion in the US.

In fact, the consequences of South Korea accepting Trump's extortion are greater

Beck further said: $12.5 billion is only 0.7% of South Korea's GDP. From this perspective, giving $35 billion to the US is worse than using 0.5%, i.e., $17.5 billion, to support South Korean companies and workers affected by Trump's tariff war. Moreover, the world is vast, and without the US market, other markets can be sought.

Original: https://www.toutiao.com/article/7551990818580513318/

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