(Bloomberg) -- The US and South Korea are in a deadlock over details of a $350 billion investment fund the two countries agreed to as part of a broader trade deal, with a top Seoul official warning that even the shipbuilding partnership is at risk if they fail to narrow the differences.

Speaking at a forum on Tuesday, Kim Yong-beom, director of national policy at South Korea’s presidential office, said Seoul has been emphasizing to US officials that it cannot accept the same terms as Japan’s $550 billion investment pledge finalized last week, citing the disparity in the size of the two economies and the potential repercussions on the foreign exchange market.

Most Read from Bloomberg

London Commuters Face Travel Chaos as Tube Strike Hits Hard

NYC Grapples With a Weighty Dilemma: What To Do About Trucks

One-Way Streets Are the Wrong Way to Tame Downtown Traffic

Philadelphia Transit Hub to Get Funding Bailout to Reverse Cuts

A Looming End to $1-a-Month Home Rentals Stokes Worries in Egypt

“Without an agreement, it will be difficult for the MASGA project to even get off the ground,” Kim said, referring to Make American Shipbuilding Great Again, a term Seoul coined for reviving the US shipbuilding sector. Kim said the US had presented South Korea with a draft similar to the one Japan accepted, but Seoul has maintained it cannot agree to those terms.

“The circumstances facing South Korea and Japan are fundamentally different,” Kim said, pointing to Japan’s currency swap arrangements and the yen’s role as a reserve currency.

While it’s important to determine who makes the fund’s investment decisions and how the profits are shared, the more pressing issue for South Korea is figuring out how to secure and manage $350 billion from the foreign exchange market, he said.

The $350 billion fund is a central pillar of the trade deal that preserved a 15% tariff on imports from South Korea, but the two countries remain divided over how the fund will operate. Kim said last month that the investment pledge would be structured mainly as loan guarantees rather than direct capital injections.

The deadlock comes amid other points of tension between the two nations. The detention of hundreds of South Koreans in a US immigration raid on a Hyundai Motor Co.-LG Energy Solution Ltd. battery plant in the state of Georgia threatens to make Korean companies more reluctant to invest in the US even as they are encouraged to do so as part of the trade deal.

Last week, President Donald Trump finally signed an executive order implementing his trade agreement with Japan, with a maximum 15% tariff on most of its products.

The deal, including the investment pledge, was struck in July. But it has taken weeks to be formalized as Washington and Tokyo haggled over its terms. A memorandum of understanding detailing the funding pledge showed that Japanese imports may face higher tariffs if the country doesn’t fund Trump’s selected investments.

Trump has yet to sign an executive order to lower auto tariffs for South Korea as agreed, so the two countries have also been holding working-level talks to follow up on their July deal.

“The auto industry is important, and narrowing tariff differences is also important, but a figure of $350 billion could deal too great a shock to our entire economy that we cannot rush just to secure a tariff reduction in the auto sector,” he said.

Most Read from Bloomberg Businessweek

Why Iowa Chooses Not to Clean Up Its Polluted Water

Your Paycheck in Stablecoins? That’s Local Banks’ Worst Nightmare

What If We’re Doing AI All Wrong?

Novo Has High Hopes That Ozempic Pill Can Also Fight Dementia

The Ironman CEO Wants to Turn the Race Organizer Into a Lifestyle Brand

©2025 Bloomberg L.P.