U.S. President Donald Trump insisted that South Korea would provide billions of dollars in investments "upfront", despite Seoul's contention that it would be plunged into a financial crisis if it met the U.S. demands without safeguards.
Trump's remarks contradict South Korea's understanding of its trade deal with the United States, however, a government official told Reuters, speaking on condition of anonymity because of the sensitivity of the talks.
"We have never thought about making the investments in lump sum," the South Korean official added, adding that both South Korea and Japan intended to provide financing for projects only after a "capital call" made by the United States.
South Korea, which pledged $350 billion toward U.S. projects in July, has balked at U.S. demands for control over the funds and South Korean officials say talks to formalise their trade deal are at a deadlock.
Trump formalised a trade deal with Japan this month, lowering tariffs on imports of its automobiles and other products in return for $550 billion of its investment in U.S. projects, and U.S. officials have pressed Seoul to follow suit.
"We have in Japan it's $550 billion, South Korea's $350 billion. That's upfront," Trump told reporters on Thursday in the Oval Office, as he touted the amount of money he said his sweeping tariffs have brought in.
Trump's comments came as political doubts have increasingly dogged his trade talks with South Korea, spooking investors who now worry Seoul may end up with a raw deal or perhaps none at all.
Both Japan and South Korea have said they will make investments based on U.S. projects, rather than paying the total of $900 billion upfront.
A memorandum of understanding on Japan's $550 billion investment agreed with the United States in September also made no mention of "upfront" payment of the funds.
It says the investments should be made 'from time to time' until the end of Trump's term in January 2029. Under its deal, Tokyo agreed to transfer money within 45 days after the U.S. selected a project.
Japanese officials did not comment on Trump's "upfront" remarks on Friday.
South Korea has also said it cannot afford to make large cash investments. Last week President Lee Jae Myung told Reuters that without safeguards such as a currency swap, South Korea's economy could be plunged into crisis.
A second South Korean government official declined to comment on Trump's remarks, but reiterated that talks with the United States were based on the principle that the deal should meet national interests and be commercially feasible.
Analysts say a currency swap is unlikely, and South Korean negotiators are pushing for most of the funds to be in the form of loans, rather than direct investment.
They are also pressing Washington for mechanisms to ensure that the projects are commercially viable.
