President stresses 'commercial viability' in $350 bil. US investment talks

President Lee Jae Myung said Korea is continuing talks with the United States on the details of its $350 billion investment plans based on the principle that it will pursue only projects with “commercial viability.”

During a press conference on Friday, he said the overarching goal is to establish a mutually beneficial framework by thoroughly scrutinizing individual project returns, capital recovery mechanisms, revenue-sharing models and the allocation of potential losses.

“Managing the U.S. investment portfolio is an extraordinarily complex and demanding endeavor. From my standpoint, $350 billion represents taxpayers’ money,” Lee said.

The president said that he had demanded from the outset that the phrase “commercial viability” be included in the official accord. Following tough negotiations, Korea successfully secured the condition in the final text.

“It was an exceptionally tough struggle, as no other nation managed to include such a clause,” Lee noted. “However, once specific discussions on actual capital deployment began, new friction points emerged.”

Elaborating on the current status, he added, “Our mandate is to fund projects that make sound economic sense, which is also codified in our laws. The real friction points center on how to recover the investment, how to distribute the returns and how to deal with losses from underperforming projects.”

He further disclosed, “While officials suggested that a consensus had nearly been reached, my own review revealed several terms that were hard to endorse, prompting us to reopen discussions.”

This suggests that, contrary to views that working-level talks were practically finalized, key disagreements remain subject to further deliberation.

Lee reaffirmed that protecting the national interest remains a key principle throughout the investment process.

Previously, Seoul agreed to channel $350 billion into strategic U.S. investments in exchange for lowering tariffs from around 25 percent to 15 percent. The package consists of $200 billion earmarked for strategic industries and $150 billion designated for joint maritime and shipbuilding initiatives.

However, the two nations remain divided over financing methods, revenue-sharing structures and project timelines. While Washington is pushing for faster execution, Seoul is weighing project returns alongside the potential impact on domestic companies and foreign exchange market volatility.

Lee’s latest statements signal that Korea intends to ensure the commercial viability of investment projects and clear terms for recovering the funds before moving forward.

Addressing Washington’s pressure on domestic tech firms to construct semiconductor plants in the U.S., Lee also stated, “Because this directly intersects with corporate strategy and national industrial policy, we will respect industry perspectives while steering toward a pragmatic outcome that protects our national interest.”

Regarding the controversial approval process for single-stock leveraged exchange-traded funds (ETFs) tracking Samsung Electronics and SK hynix, Lee said he had not been fully briefed on the specific administrative steps behind their authorization, refraining from addressing claims that the products were effectively approved at a closed-door meeting at the presidential office.

He, however, acknowledged that the initial policy design had shortcomings.

Lee noted that while leveraged funds tracking individual domestic stocks were already trading on foreign exchanges such as Hong Kong, local retail investors were barred from buying them domestically. Thus, he maintained that the initial intent to introduce these instruments locally was fundamentally sound.

“It was also expected to help stabilize foreign exchange flows,” he said.

Complications arose when market sentiment turned downward following the product rollouts. Single-stock leveraged ETFs typically multiply an underlying stock’s daily return by two. While gains are amplified during rallies, downturns can also result in amplified losses.

“As the market turned, losses doubled. Investors who bought before the downturn saw their losses magnified,” Lee said.

Nonetheless, he implied that investor losses cannot be attributed entirely to regulatory policy. “Market movements and investment returns are fundamentally unpredictable.”

At the same time, he acknowledged some responsibility for the lack of adequate investor protection measures when the products were launched.

“The government could be criticized for failing to introduce safeguards in advance,” he said.

In response to mounting retail losses, financial regulators subsequently introduced stricter investor protection measures, raising entry barriers by imposing a 30 million won ($22,000) minimum deposit requirement and mandating prior education and simulated trading.

Lee said that market conditions have stabilized significantly following these corrective measures.