US President Donald Trump has intensified his tariff-focused push to attract foreign manufacturing, warning that companies that fail to build factories in the United States could ultimately face tariffs as high as 300%.
The comments came as Washington separately increases pressure on South Korea over implementation of its $350 billion US investment commitment, particularly Seoul’s potential participation in the costly Alaska LNG project. South Korean officials maintain that investment decisions must satisfy commercial viability requirements rather than being treated as automatic commitments.
The two developments highlight how tariffs and investment are becoming increasingly interconnected in US economic policy, with market access being used alongside large investment packages to encourage overseas companies and governments to commit capital to American projects.
Key Overview
- Trump said foreign companies could face tariffs of 150% to 300% if they fail to establish production in the US.
- Companies would be given roughly 18 months to build American factories before potentially facing higher tariffs.
- South Korea has committed $350 billion to US investment and shipbuilding cooperation under its bilateral trade framework.
- The package consists of $200 billion in strategic investment and $150 billion in shipbuilding cooperation.
- Seoul has not made a final investment decision on the Alaska LNG project.
- Alaska LNG is estimated to cost between $44.5 billion and $54.5 billion.
- A $22.3 billion Texas power project is the first confirmed strategic investment under the framework.
- Korea and the US are also pursuing a framework covering eight large nuclear reactors.
Trump Raises the Stakes With Tariff Threat
Speaking at a campaign rally in Vandalia, Ohio, Trump said companies producing abroad would be given approximately a year and a half to establish manufacturing facilities in the United States.
He said companies that failed to do so could face tariffs ranging from 150% to 300%, presenting the threat as part of his broader strategy to encourage domestic manufacturing and foreign direct investment.
The comments were made ahead of the November 3 US midterm elections, with Trump campaigning for Republican candidates in Ohio. He argued that tariffs had already helped persuade companies from countries including South Korea, Japan and Canada to increase investment in US factories.
Importantly, the 300% figure was a broad warning about foreign production rather than a specific announced tariff rate on South Korea.
Korea’s $350 Billion Investment Commitment
South Korea’s exposure to US trade policy stems from a bilateral agreement reached in 2025. Under the framework, Seoul committed a total of $350 billion toward US investment in exchange for lower American tariffs on Korean goods.
The package is divided into $200 billion for strategic investments and another $150 billion for shipbuilding cooperation, including investments, financing and guarantees.
US reciprocal tariffs on South Korean products were lowered from 25% to 15%, while tariffs covering Korean automobiles and auto parts were also reduced to 15%.
However, Korean legislation governing the investment programme requires strategic projects to meet commercial viability requirements, including the ability to generate sufficient cash flows to repay principal and interest.
That provision has become central to the disagreement surrounding Alaska LNG.
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Alaska LNG Becomes the Main Point of Tension
Trump has promoted South Korean participation in the Alaska LNG project as part of the $200 billion strategic investment programme. Seoul, however, says it has agreed to evaluate the project rather than make an unconditional investment commitment.
Trump escalated pressure after Korean officials disputed suggestions that participation was finalised. He said that if South Korea did not want to proceed, Washington could “charge them more”, although he did not specify precisely what additional charge would be imposed.
Commercial concerns help explain Seoul’s caution.
Developer Glenfarne Group estimates that Alaska LNG could cost $44.5 billion to $54.5 billion, with the development requiring an approximately 800-mile pipeline carrying natural gas from Alaska’s North Slope to Nikiski.
The project would also require gas treatment infrastructure and a liquefaction export terminal.
Its estimated construction cost per unit of annual LNG production capacity is substantially higher than many recently developed US Gulf Coast LNG facilities, raising questions over whether transportation advantages to Asian markets can offset the higher upfront investment.
Texas Project Moves Ahead First
While Alaska LNG remains under review, another major Korean-backed US energy investment has moved further ahead.
South Korea and the US selected a $22.3 billion power project in Encinal, Texas as the first project under the strategic investment framework.
Known as Project Star, the development is expected to provide 6.47 gigawatts of natural-gas-fired generation capacity supporting an adjacent 5-gigawatt digital infrastructure campus.
Initial generating capacity could begin operating in 2029, subject to permits and approvals, with full operation targeted for 2032.
Korean authorities said the project was judged commercially reasonable after considering electricity demand, projected prices and the experience of the companies involved.
Nuclear Investment Adds Another Major Commitment
The bilateral investment programme could also reshape US nuclear power development.
A separate framework provides for up to $120 billion of Korean investment supporting the development of eight large nuclear reactors in the United States.
The proposed programme demonstrates the scale of Korea’s potential involvement in American energy infrastructure, but individual projects remain subject to further reviews and investment decisions.
For Seoul, the challenge is balancing its trade relationship with Washington against the need to ensure that large overseas investments generate commercially sustainable returns. For Washington, tariffs and market access are increasingly being paired with investment commitments as tools for expanding domestic manufacturing, energy production and infrastructure.
Sources: Asia News Network / Reuters / Yonhap News Agency / Korea.net / Ministry of Trade, Industry and Resources
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