Trump's 'done deal' claim complicates Seoul's calculus; experts say it's too soon to judge commercial viability

Experts said it is too early to determine whether South Korea's proposed investments in the United States meet the government's stated standard of "commercial rationality," as key contract terms remain unresolved. For the Texas gas combined-cycle power project, they said the buyer, duration and fixed rate under the power purchase agreement (PPA) must be confirmed; for the nuclear power plant project, the site, schedule and specific commercial terms; and for the Alaska LNG project, the import price — all factors that will ultimately determine profitability.

A central concern is whether Seoul will be able to uphold its commercial rationality principle in future negotiations, particularly after US President Donald Trump announced the nuclear and Alaska LNG projects as if they were already finalized — even as the South Korean government had said it would continue discussions on the detailed terms of both.

Heo Yun, a professor at Sogang University's Graduate School of International Studies, said Thursday that "commercial rationality is meaningful in that it secures economic benefits in advance and improves the efficiency of US-bound investment, but it remains a vague concept." He said assessing profitability at this stage is difficult, given that long-term investments spanning roughly 20 years would be subject to changes in government, policy and economic conditions in both countries.

Cho Hong-jong, a professor of economics at Dankook University, said the information made public so far is insufficient to judge the commercial rationality of the investments. Safeguards have been put in place to reduce investment risk — including caps on investment, tax compensation, profit-and-loss consolidation across projects, and priority repayment of principal and interest upon liquidation — but the detailed contract terms that will actually determine profitability still need to be confirmed, he said.

"We can't say definitively that this was well done, because no numbers have come out yet," Cho said. He added that a full assessment of the pros and cons would require looking at additional items South Korea has yet to secure, including volume increase and renewal rights in the LNG contract, ongoing nuclear negotiations, and issues around export restrictions and intellectual property rights tied to any equity stake in Westinghouse.

Yoo Seung-hoon, a professor of energy policy at Seoul National University of Science and Technology, said "there is still a long way to go on detailed negotiations, but all three projects have sufficient room to achieve commercial rationality." On the Texas combined-cycle plant, he noted that South Korean state-owned power companies already operate gas combined-cycle plants in the United States at a profit, and that rapidly growing local power demand driven by data center expansion creates favorable conditions for securing stable electricity offtake.

He also cited growing US power demand and the potential for South Korean nuclear supply chain companies to enter the American market as positive factors for the nuclear project. Because the eight reactors are to be developed in phases, South Korea can assess viability before committing to follow-on investments, he said, adding that domestic equipment manufacturers may have opportunities to participate not only in APR1400 construction but also in AP1000 builds.

On Alaska LNG, however, he was more cautious. "Alaska LNG is the most uncertain of the three," Yoo said, while noting that linking domestic steel companies' equipment supply with LNG imports back to South Korea could generate meaningful economic benefits for Korean firms.

Experts said the evaluation should go beyond the return on investment for each individual project and also weigh the ancillary benefits South Korea could gain through the broader investment package.

"The numbers upfront matter, but there are many other benefit conditions we can secure behind the scenes," Cho said. "How much of those we lock in will determine whether the overall deal is favorable or not." Heo similarly said the investment's merits should be assessed as a package that encompasses other bilateral issues, including Korean companies' access to the US market, visa matters and security concerns.

A key variable going forward is the gap between the two sides' public positions. Seoul has said it will begin reviewing the Alaska LNG project on the premise that commercial rationality and domestic legal requirements are met, and that it will finalize the site, schedule and commercial terms for the nuclear plants on a project-by-project basis. Trump, by contrast, announced the eight nuclear reactors and the Alaska LNG project as if they were already confirmed Korean investments.

Heo analyzed Trump's approach as a dual play: highlighting large-scale foreign investment as an achievement ahead of the midterm elections while using the announced figures as an anchor point to set the baseline for subsequent negotiations — a so-called anchoring effect.

"Once you plant a number, it gives you a preemptive advantage in negotiations," he said. He also interpreted the agreement to cooperate — subject to domestic legal requirements — on advance payments of up to $10 billion for long-lead nuclear components as a move by the United States to press South Korea for a more explicit investment commitment.

Cho also said "there is a possibility that Trump will push hard on the US investments he has mentioned, with midterm elections approaching."

Experts recommended that rather than directly contradicting the US announcement, Seoul should use working-level channels to clearly communicate what has not yet been agreed upon while securing favorable terms in follow-on negotiations. "Instead of simply raising objections to the US announcement, South Korea needs to build negotiating leverage by linking the investment talks to other bilateral issues," Heo said.