South Korea Commits $150 Billion in U.S. Investments as Trump Secures Trade Pledge

Economic

Summary:

At a high-stakes summit, South Korea pledged $150 billion in U.S. investments across shipbuilding, nuclear energy, aerospace, and tech, while agreeing to explore a $350 billion fund in exchange for tariff relief on Korean goods....

Seoul Bets Big on U.S. Ties: $150B in Corporate Investment and Strategic Sector Support

At Monday’s summit between U.S. President Donald Trump and South Korean President Lee Jae Myung, South Korean corporations unveiled a bold $150 billion U.S. investment plan spanning defense, tech, clean energy, and heavy industry. The deal, hailed by Trump as a cornerstone of revitalized economic cooperation, was backed by a broader non-binding agreement to direct up to $350 billion in future investments under a trade deal framework that would lift threatened tariffs on Korean exports.

The pledged $150 billion six times the total South Korean FDI in the U.S. during 2024 marks an aggressive push into sectors Washington considers strategic, including artificial intelligence, semiconductors, shipbuilding, and energy security.

Strategic Sectors and High-Stakes Commitments

In aerospace, Korean Air committed to purchasing 103 Boeing jets worth $36.2 billion and signed a $13.7 billion deal with GE Aerospace for engines and long-term maintenance, the largest aviation order in South Korea’s history.

In automotive, Hyundai Motor Group raised its U.S. investment target to $26 billion through 2028, expanding factories, building a new steel mill in Louisiana, and establishing a robotics hub with annual output of 30,000 units.

Shipbuilding featured heavily in the summit’s agenda. HD Hyundai and Korea Development Bank will jointly launch a multibillion-dollar fund with Cerberus Capital aimed at rebuilding U.S. maritime capacity. Samsung Heavy Industries and Vigor Marine also signed a preliminary agreement to modernize U.S. shipyards and service Navy vessels.

In energy, Korea Gas Corp signed deals to import 3.3 million tonnes of U.S.-sourced LNG annually from 2028, strengthening bilateral energy flows. Meanwhile, Korea Hydro & Nuclear Power and Doosan Enerbility partnered with X-energy and Amazon Web Services on small modular reactor (SMR) designs, and signed further nuclear infrastructure deals with Fermi America and Centrus to support AI-based energy projects in Texas.

Rare Minerals and Supply Chain Realignment

In critical minerals, Korea Zinc signed a long-term agreement with Lockheed Martin to supply germanium from 2028 onward, deepening defense-aligned rare metal supply chains. This reinforces efforts to diversify away from China and stabilize U.S. manufacturing inputs.

Alongside concrete corporate pledges, South Korea reaffirmed its July 2025 trade proposal to commit $350 billion in strategic investments in exchange for tariff relief. While the fund remains non-binding, South Korean presidential adviser Kim Yong-beom said the money would target sectors such as quantum computing, batteries, chips, and pharmaceuticals. The exact mechanism for disbursement or oversight is still under discussion.

This deal comes as Trump’s “America First” industrial policies face pressure to deliver economic and geopolitical gains amid rising tensions with China. By facilitating South Korean investment in key industries, the U.S. bolsters its industrial base while countering East Asian supply chain dependencies. For Seoul, the deal secures better trade conditions and a stronger foothold in the U.S. market.

The summit cements South Korea’s evolving role not just as a manufacturing hub, but also as a strategic technology and infrastructure partner to the United States in an increasingly multipolar economic landscape.

Source: Reuters

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Commodity

Economic

Gold Gains as Trump Fires Fed Governor, Stirring Inflation and Institutional Worries

Gold prices climbed on Tuesday after U.S. President Donald Trump moved to oust Federal Reserve Governor Lisa Cook, a dramatic step that intensified concerns over the central bank’s political independence and prompted investors to seek refuge in safe-haven assets. The precious metal rose as much as 0.6%, briefly nearing $3,376 an ounce, before settling up 0.3% in Singapore trading.

Trump’s announcement, posted on his Truth Social platform late Monday, accused Cook of mortgage fraud and claimed authority to remove her a claim Cook strongly denied, stating through her lawyer that the president has “no authority” to fire her under current U.S. law. The incident sparked a brief decline in the dollar across major currency pairs, further supporting gold’s upward momentum.

While gold has gained over 25% year-to-date, recent months have lacked strong upward catalysts after April’s surge past $3,500 amid geopolitical risk. Tuesday’s rally reflects renewed investor anxiety over both institutional stability and monetary direction, particularly with Trump attempting to shift the Fed’s composition in his favor.

Fed Pressure and Market Response

By trying to remove Cook and replacing outgoing board member Adriana Kugler with Trump ally Stephen Miran, the president is pushing to secure a majority on the Fed’s seven-member board. This potential shift is seen as paving the way for more dovish monetary policy aligned with Trump’s repeated calls for interest rate cuts despite the Fed holding rates steady throughout 2025 to avoid further inflationary pressures triggered by trade tariffs.

Strategist Charu Chanana from Saxo Capital Markets noted that any Trump appointee is likely to “toe the line” on easing, which supports bullish gold sentiment both through rate-cut expectations and longer-term inflation hedging. Lower interest rates tend to benefit gold by reducing the opportunity cost of holding the non-yielding asset.

Outlook and Economic Watchpoints

Looking ahead, traders are watching closely for Friday’s U.S. personal consumption expenditures (PCE) data the Fed’s preferred inflation gauge. The core figure, which excludes food and energy, is expected to show the fastest annualized growth in five years. A strong reading may temper expectations for imminent policy easing, potentially capping gold’s upside in the short term.

Elsewhere in commodities, silver gained alongside gold, while platinum and palladium fell. In base metals, copper inched up 0.1% to $9,807/ton on the LME, while iron ore retreated 1% to $102.30, with Shanghai steel and Dalian iron futures also softening.

The unfolding clash between the White House and the Fed along with looming inflation prints may determine whether gold continues its ascent or stalls near current levels. For now, markets remain on edge as political friction spills into monetary governance.

Source: Bloomberg

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Economic

European Equities Slide on French Political Crisis and Fed Shakeup

European stock markets retreated on Tuesday, led by steep declines in France’s CAC 40 index, which dropped 1.4% amid mounting political instability. The sell-off intensified after French Prime Minister François Bayrou announced a high-stakes confidence vote for September 8 over his contentious budget cut proposals, which appear doomed to fail as the three main opposition parties signaled they would not support his minority government.

The uncertainty rocked France’s financial sector, with banking giants BNP Paribas and Société Générale plunging 6.2% and 5.2%, respectively. French government bonds also came under pressure as markets priced in the heightened risk of political paralysis or a snap election.

The broader European STOXX 600 index fell 0.7% by 0704 GMT, with all major regional markets posting losses as investors moved away from riskier assets.

Fed Independence Questioned After Trump Fires Governor Cook

Adding to the market anxiety was a surprise move from U.S. President Donald Trump, who on Monday dismissed Federal Reserve Governor Lisa Cook over alleged misconduct related to mortgage borrowing. The firing sparked a global backlash, raising alarm over the integrity and independence of the Federal Reserve.

Cook responded through her lawyer, Abbe Lowell, asserting that “no cause exists under the law” for her removal and that Trump lacked the authority to dismiss her, setting the stage for a potential constitutional confrontation.

The move comes just days after a dovish signal from Fed Chair Jerome Powell had boosted optimism across equity markets, pushing the STOXX 600 near its all-time highs. However, Trump’s actions introduced fresh doubts about the Fed's autonomy, leading to a flight from U.S. assets and indirectly weighing on European investor sentiment.

Sector Spotlight and Corporate News

Beyond financials, British American Tobacco shares fell 1.8% following the abrupt resignation of Chief Financial Officer Soraya Benchikh after just 15 months in the role, further eroding confidence in the consumer staples sector.

Overall, a potent mix of domestic European political fragility and cross-Atlantic institutional instability has led investors to scale back risk exposure, with further volatility expected in the lead-up to France’s confidence vote and ongoing fallout from the Fed leadership disruption.

Source: Reuters

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Economic

Political

Forex

The German 2y yield is just shy of 2% again, but we see very little room for front end yields to rise further

Markets are cooling further on the idea of another European Central Bank rate cut. At points starting this week, markets were discounting less than 15bp of additional easing over the next year. More strikingly, and looking slightly further ahead, the 1y1y forward ESTR OIS is less than 4bp below current ESTR fixings. The optimism seems to come on the back of trade agreements being reached with the US, plus the prospects of sizeable fiscal stimulus set to come out of Germany. This has biased the PMIs and, more recently, the German Ifo business outlook higher.

These developments have pushed 2y German bond yields within shouting distance of 2% and pre-‘Liberation Day’ ranges again. We struggle to find good reasons for rates to push beyond this level. For all the optimism, we think markets are overlooking the downside risks – be it disinflationary spillovers as the Federal Reserve starts cutting or implementation risks around German spending and reform plans.

French headlines on Monday afternoon highlighted that other sources of potential turmoil could dent the optimism. The French Prime Minister has called for a vote of confidence over his government’s savings plans to take place on 8 September; this will force opposition parties to take a position ahead of planned street protests. The spread of 10y French government bonds over German Bunds ended at 5bp. In the Bunds themselves, it was enough to trigger a small safety bid as 10y Bunds richened 1bp versus swaps, while the 2y is still around 0.5bp.

Looking further out, we do think there are reasons to be more bearish on rates, and we should be looking for a steepening of curves from the long end first.

Back end of US curve not tamed by Powell, and rightly so

The dovish turn of US rates after Fed Chair Jerome Powell's speech on Friday already seems to be showing signs of fading. While markets are still holding on to two more cuts this year, the belly and the back end of the UST curve want to test higher. And we argue this is indeed the sensible reaction. Earlier cuts leave the back end exposed to inflation risks, which will only intensify in the coming months. Add US President Donald Trump’s challenges to the central bank’s independence (including the latest moves to fire governor Lisa Cook) and fiscal deficit concerns, and together those give us the ingredients to reiterate our bearish view on 10Y USTs in the near term.

Tuesday’s events and market views

Most data of interest will come from the US. First, we have durable goods orders, where the headline number is expected to decline by 4%. Having said that, the headline series is very volatile, and consensus sees the number excluding transportation (i.e., Boeing) rising by 0.2%. Then we have the FHFA house price index for June, which may also get some attention, given that weaknesses in the housing markets are starting to show up. The Conference Board consumer confidence index is expected to nudge lower from 97.2 to 96.4.

In terms of issuance, Austria has a syndication scheduled for 7Y RAGBs for an estimated €3bn. From Italy, we have a 2Y BTP auction totalling €3bn, and the US will also auction 2Y Notes for $69bn. Until the end of this week, Belgium will issue 1Y and 10Y retail bonds.

Source: ING

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Economic

Trump Threatens Harsh Measures Over Global Digital Taxes

On Monday, August 25 (U.S. time), President Donald Trump issued a strong ultimatum to America's trading partners: remove digital service taxes and related regulations, or face serious economic consequences.

In a post on Truth Social, Trump claimed that digital taxes currently imposed by dozens of countries unfairly target American tech giants like Meta, Alphabet (Google), and Amazon. He described these taxes as “discriminatory” and warned that any country maintaining them would face “significant new tariffs” on their exports to the U.S.

Export Bans on High-Tech Goods Loom

In addition to tariffs, Trump signaled that the U.S. would begin restricting exports of highly protected American technologies particularly advanced semiconductors. “You must show respect for America and our great tech companies or prepare to face the consequences,” he wrote.

This message marks one of Trump’s most aggressive trade threats since returning to the presidency and signals a renewed willingness to use economic pressure to defend American interests in the global digital economy.

Mounting Pressure on U.S. Allies and Trade Partners

Digital service taxes have long been a sticking point in trade negotiations. In June, Trump announced the U.S. would cut off all trade talks with Canada over DST. Ottawa backed down just before the tax was set to take effect, in what many saw as a diplomatic retreat under U.S. pressure.

Other major economies like France, the UK, India, and the European Union have either introduced or proposed DSTs, arguing they ensure fair tax contributions from tech companies that generate large revenues without a physical presence in their markets.

But Trump’s latest warning may force a policy reckoning. With the U.S. threatening both tariffs and chip export bans, countries must now weigh the cost of sticking with DST policies against losing access to American technology and markets.

Global Tech Supply Chains at Risk

Should the U.S. go forward with tech export restrictions, the fallout could be global. Nations like Vietnam, India, and Mexico emerging as alternatives to China in global tech manufacturing may find themselves caught in a geopolitical crossfire.

Trump’s “America First” stance is reshaping not just trade policy but the structure of digital taxation and global tech supply chains. This new front in U.S. trade diplomacy could determine how digital economies evolve and who holds power in the next phase of the tech age.

Source: CNBC

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Dark Current

Economic

Commodity

Oil prices edged down on Tuesday, after surging nearly 2% in the previous session, as traders closely monitored developments in the Russia-Ukraine conflict for potential disruptions to regional fuel supplies.

Brent crude fell 32 cents, or 0.5%, to $68.48 per barrel at 0448 GMT, while West Texas Intermediate (WTI) crude also lost 33 cents, or 0.5%, to $64.47 per barrel.

Both contracts rose to their highest in more than two weeks on Monday, with WTI climbing above the 100-day moving average.

"The risks for crude oil prices appear tilted toward further gains, particularly if the price sustains a move above the $64–$65 resistance level," IG analysts said in a note.

Oil's rally on Monday was primarily driven by worries about supply disruptions as Ukraine struck Russian energy infrastructure, and as traders anticipated more U.S. sanctions on Russian oil.

The attacks disrupted Moscow's oil processing and exports, created gasoline shortages in some parts of Russia, and came in response to Moscow's advances on the front lines and its pounding of Ukraine's gas and power facilities.

Barclays, in a note to clients on Monday, said that oil prices remain in a tight range amid geopolitical volatility and relatively resilient fundamentals.

U.S. President Donald Trump has renewed his threat to impose sanctions on Russia if there is no progress towards a peace deal in the next two weeks.

Traders will also be monitoring the impact of looming U.S. tariffs against India for its continued purchase of Russian oil, said Ole Hansen, head of commodity strategy at Saxo Bank.

Indian exporters are bracing for disruptions after a U.S. Homeland Security notification confirmed Washington will impose an additional 25% tariff on all Indian-origin goods from Wednesday.

This means Indian exports will face U.S. duties of up to 50% - among the highest imposed by Washington - after Trump announced extra tariffs as a punishment for New Delhi's increased purchases of Russian oil earlier in August.

Traders are awaiting the U.S. inventory data from the American Petroleum Institute (API) later in the day, with expectations pointing to a fall in crude and gasoline stocks but a possible build in distillate inventories.

Source: Reuters

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Economic

Trump Holds Line on Tariff Pact as Lee Jae Myung Commits to U.S. Investment

President Donald Trump announced Monday that South Korea would fully adhere to the sweeping trade and investment deal struck in late July, despite initial uncertainty heading into his first summit with newly elected South Korean President Lee Jae Myung. At stake was a 15% tariff framework and $350 billion in investment commitments aimed at bolstering American industry and infrastructure.

Speaking after the meeting outside the White House, Trump declared, “We stuck to our guns,” confirming that Seoul would proceed with the deal’s terms. The agreement notably includes hundreds of billions in both public and private sector funds from Korea, alongside large-scale industrial partnerships such as Korean Air Lines’ plan to purchase more than 100 Boeing aircraft and additional $150 billion in private sector investment projects in the U.S.

Pre-Summit Uncertainty Eased by Diplomatic Charm

Earlier Monday, the meeting had been in jeopardy after Trump raised doubts over South Korea’s political stability, citing alleged “vicious raids” by the Lee administration on religious institutions and even U.S. military bases. His Truth Social post likened the political climate in Seoul to a “Purge or Revolution,” referencing the fallout from former President Yoon Suk Yeol’s martial law declaration and subsequent ousting.

However, President Lee managed to smooth over tensions, praising Trump’s Oval Office renovations, stock market performance, and peacekeeping efforts with North Korea. Their Oval Office exchange was marked by friendly rhetoric, with Lee even suggesting Trump could “build a Trump Tower in North Korea” if peace talks advance. Trump, for his part, reiterated his interest in meeting Kim Jong Un again, claiming they had developed a “very friendly” relationship.

Shipbuilding and Defense Cooperation Expand the Deal’s Scope

Alongside trade and investment, both leaders highlighted collaboration in defense and shipbuilding. Trump expressed intent to purchase ships from South Korea and push for Korean firms to manufacture vessels within the U.S., creating American jobs. President Lee responded with a pledge to increase South Korea’s defense spending to acquire advanced warfare assets, though details remain vague.

The expanded cooperation reflects broader U.S. strategic interests in maintaining supply chain resilience and military readiness, especially amid heightened tensions with China and North Korea.

Deal Cemented, but Trade Risks Remain

The finalized agreement allows South Korea to avoid the harsher 25% tariffs Trump had previously threatened, aligning it with Japan’s tariff treatment and preserving competitiveness. However, Seoul still faces exposure to future U.S. tariffs on semiconductors and EV batteries sectors crucial to South Korea’s economic future. The agreement also left the Korean agricultural sector largely untouched, a sore point for Trump’s trade negotiators, though Lee successfully avoided reopening that chapter.

South Korean officials had arrived in Washington concerned that Trump might push for new concessions. Instead, they left with the original deal intact though its durability may still hinge on political stability in Seoul and further demands from Washington as U.S. elections draw closer.

A Stabilizing Moment in a Volatile Alliance

The summit marked a key moment in restoring confidence between two longtime allies after a year of upheaval in South Korean politics. While Trump’s tone was at times confrontational, his willingness to endorse President Lee as a “very good representative” signaled that personal diplomacy may have helped solidify a fragile agreement.

What remains uncertain is how lasting the deal will be in the face of rising domestic political pressures on both sides. But for now, both Trump and Lee emerged from Monday’s meeting with a message of continuity, cooperation, and cautious optimism in navigating the complex intersection of economics, security, and diplomacy in the Asia-Pacific.