South Korea Warns U.S. Trade Deal Risks 1997-Style Economic Crisis

South Korea's government has raised alarms that a proposed $350 billion trade deal with the U.S. could trigger an economic crisis reminiscent of the 1997 Asian financial meltdown. The agreement, verbally discussed in July, remains in limbo due to disputes over investment controls and currency swap safeguards.

Finance Minister Lee underscored the risks during pre-UN meetings in New York, stating that direct cash transfers to U.S. investments without currency protections WOULD dangerously deplete foreign reserves. The warning comes as President Lee seeks to stabilize Korea's political and economic landscape following his predecessor's ouster.

Trade tensions escalated further this month with the TRUMP administration authorizing federal raids on Korean-affiliated businesses, complicating diplomatic efforts. Lee's August meeting with President Trump yielded no joint statements, reflecting the fragile state of bilateral negotiations.