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President Lee Jae-myung and U.S. President Donald Trump share a laugh during their summit at the Oval Office in Washington, D.C., on August 25. / Source: AP, Yonhap News

President Lee Jae-myung cautioned that meeting Washington’s demands on a planned $350 billion U.S. investment package without a currency swap arrangement could push South Korea into a financial crisis reminiscent of 1997.

In an interview with Reuters on September 19, Lee said, “If we were to withdraw the $350 billion entirely in cash and invest it in the United States without a currency swap, Korea would face a situation similar to the 1997 financial crisis.” He added, “Between allies, I expect at least a minimum level of rationality.”

The warning comes as U.S. Commerce Secretary Howard Lutnick pressed Seoul to accept terms similar to those agreed by Japan, or face a 25% tariff. Lee countered that Korea’s situation is different, noting that Japan’s $810 billion foreign exchange reserves are more than double Korea’s $410 billion, and that Tokyo enjoys a currency swap arrangement with Washington.

Lee stressed that narrowing gaps in ongoing trade talks remains difficult, as U.S. proposals have failed to guarantee commercial viability. “Reaching an agreement that ensures commercial soundness is both the key task and the biggest obstacle,” he said.

The president also addressed recent tensions after U.S. immigration authorities raided a Korean battery plant site in Georgia on September 4, detaining more than 300 Korean workers. He acknowledged public anger but said he believed the incident resulted from “overzealous law enforcement rather than a directive from President Trump,” adding that Washington had apologized and both sides agreed on “reasonable follow-up measures.”

Lee confirmed there would be no summit with Trump during his September 22–25 stay in New York for the UN General Assembly but emphasized the strength of the alliance, including Seoul’s agreement to increase its share of U.S. troop costs. He urged Washington to separate defense talks from trade negotiations.

On North Korea, Lee said he supported dialogue and cooperation in addressing the security threat posed by Pyongyang’s ties with Russia. He also told the BBC that a freeze on North Korea’s nuclear program could serve as a “realistic emergency measure.” He added that if Trump and Kim Jong-un were to reach a deal to halt nuclear production without immediate disarmament, “we could accept it, as long as the long-term goal of denuclearization is not abandoned.”