The recent U.S. midterm elections, which resulted in a Democratic victory, may weaken the Trump administration's ability to advance its policies. With the Democrats controlling both chambers of Congress, there are concerns that congressional oversight of the administration's foreign investment and trade policies could slow down project implementation.
According to government and industry sources, uncertainty surrounding large-scale foreign investment initiatives promoted by the Trump administration may increase following the midterm elections. If Congress scrutinizes the economic viability, funding structures, and government support for these investment projects, timelines and methods for projects that have not yet been finalized could be adjusted. Notably, South Korea and Japan have committed to significant investment packages during tariff negotiations with the U.S., selecting specific projects in energy and semiconductors that could be affected by these changes.
If congressional scrutiny over investment selections and funding intensifies under Democratic leadership, it could impact South Korean and Japanese investments in the U.S. There may be increased demands to thoroughly verify the profitability, permits, and purchase agreements of these projects. In cases where project structures are not yet finalized, the review process in Congress could lengthen, potentially altering investment priorities.
South Korea is moving forward with its first investment project, a gas-fired combined cycle power plant in Texas, while discussions continue regarding U.S. nuclear power construction and Alaska LNG development. According to a plan released by the government in September, the Texas gas plant project has a total cost of $22.3 billion and aims to construct a 6,472 MW power plant in Texas to supply electricity to AI data centers. However, the nuclear project has not yet confirmed specific sites, project structures, or construction timelines, and the Alaska LNG project requires further feasibility and domestic procedural reviews.
Japan, after promising $550 billion in investments during tariff negotiations last year, is gradually advancing its investment projects. In February, it announced initial projects including natural gas power and crude oil export facilities, as well as industrial synthetic diamond manufacturing. In March, it revealed plans for small modular reactors (SMRs) and additional gas power projects. Last month, Japan announced a $10 billion semiconductor manufacturing facility in New York.
According to data released by Japan's Ministry of Finance on September 28, the total cost of seven announced projects as of the end of September is approximately $130 billion. Of these, financing agreements have been signed for five projects with the Japan Bank for International Cooperation (JBIC) and private financial institutions, totaling $10.965 billion in approved loans.
Despite the Democratic control of Congress following the midterm elections, the Japanese government plans to maintain its existing investment agreements. According to a report by the Japan News Agency on November 5, the Japanese government intends to continue pursuing the $550 billion investment in the U.S. The government is also monitoring potential demands for increased investment scale or expedited timelines from the U.S.
However, there is a possibility that President Trump may adopt a more aggressive stance externally to recover from the political setback of the midterm election results. He could demand early implementation of already agreed-upon investment projects or pressure for increased investment amounts, potentially using tariffs as a negotiation tool. Concerns have been raised that if the Trump administration's foreign investment commitments, which it has touted as political achievements, are hindered by congressional oversight, conflicts between the administration and Congress could impact investment projects from South Korea and Japan.
If congressional oversight delays project implementation, both Japan and South Korea could face increased financial costs. Large-scale projects incur financial costs and various advisory and design expenses even before they commence, and delays push back the timeline for recovering investments. Particularly for projects involving government or public financial institutions, the burden of increased financial costs and fund management due to delays could grow. Given that U.S. political uncertainty can affect the economic viability of actual investment projects, how both governments navigate existing investment commitments alongside the political landscape in the U.S. will be crucial.
Kim Hyuk-jung, a senior researcher at the Korea Institute for International Economic Policy (KIEP), stated, "With the Republican defeat in the midterm elections, the Trump administration will find it difficult to create new laws. It is expected to maximize its existing authority and pressure for the swift execution of agreed-upon investments in the U.S." He added, "As U.S. investment pressures increase, South Korea should focus on securing the profitability of investment projects and pursue initiatives that can garner bipartisan support from both Democrats and Republicans."
* This article has been translated by AI.
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