South Korea Passes US Investment Bill as Trump Starts New Probe

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(Bloomberg) — South Korea’s parliament approved a special bill required to implement a pledge to invest $350 billion in the US — hours after President Donald Trump’s administration sought new legal grounds for tariffs on Seoul.

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The bill passed the National Assembly in a plenary vote Thursday after receiving unanimous approval from a special parliamentary committee and clearing the judiciary committee earlier this week. The bill paves the way for the creation of a new state-run vehicle to oversee investment projects tied to last year’s trade agreement with Washington.

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With passage of the bill, Seoul is looking to finalize the trade deal after months of tense negotiations between the two longtime allies on tariffs and investment. Delays in implementing the commitment had irked Trump, prompting him in January to threaten duties of up to 25% on US imports of Korean goods and spurring South Korea to fast-track the bill’s passage.

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While the approval brings some clarity to South Korea, the US Supreme Court’s decision in February to strike down Trump’s emergency powers to impose tariffs has sparked renewed instability in global trade. Fresh uncertainty was injected into the trade outlook overnight after US Trade Representative Jamieson Greer announced that his office would begin a probe into more than a dozen major economies including South Korea under Section 301 of the Trade Act.

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The latest US move is likely the first of several sweeping trade investigations that set the stage for new tariffs, as Trump’s administration looks for ways to replace the levies struck down by the Supreme Court. A global 10% tariff imposed on US trading partners immediately after the court ruling is only a stopgap measure that will expire after 150 days.

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Much like its neighbor Japan, South Korea is following through on its deal with the US given the likelihood that duties in one form or another are likely to continue.

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The legislation establishes a Korea-US Strategic Investment Corp., a government-funded entity that will oversee large-scale investments in the US across sectors including semiconductors, energy infrastructure and shipbuilding cooperation. 

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“We hope this will serve as a meaningful opportunity to strengthen strategic industry cooperation between Korea and the US and to ease tariff and trade-related risks,” Woo Won-shik, speaker of the National Assembly, told lawmakers Thursday.

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The corporation will begin with 2 trillion won ($1.4 billion) in capital fully funded by the government and operate with a three-member board of directors, according to the finance ministry.

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A dedicated investment fund will be set up within the corporation to finance projects through equity investments as well as loans and guarantees, including support for shipbuilding cooperation initiatives with the US. The law also requires the corporation to establish a risk management committee to oversee financial exposure tied to investments.