Since a handshake deal by the allies' leaders in July to lower US tariffs to 15 per cent from 25 per cent, as Trump earlier imposed, South Korea has said the $US350 billion ($A535 billion) in investment would be in the form of loans and loan guarantees as well as equity.
Trump in remarks this week said South Korea would provide the investment "upfront," despite the government's contention that kind of outlay could plunge Asia's fourth largest economy into a financial crisis.
"The position we're talking about is not a negotiating tactic but rather it is objectively and realistically not a level we are able to handle," South Korea's National Security Adviser Wi Sung-lac said on Channel A News television.
"We are not able to pay $US350 billion in cash," he said.
South Korea, which pledged $US350 billion toward US projects in July, has baulked at US demands for control over the funds and South Korean officials say talks to formalise their trade deal are at a deadlock.
On Thursday, Trump touted the amount of money he said his sweeping tariffs are bringing into the United States, saying: "We have in Japan it's $US550 billion, South Korea's $US350 billion. That's upfront."
Last week South Korean President Lee Jae-myung told Reuters that without safeguards such as a currency swap, South Korea's economy, with foreign exchange reserves of $US410 billion, would plunge into a crisis if it were made to make a massive outlay.
Wi, the top security adviser to Lee, said nobody would question South Korea's position on the feasibility of the amount if it were required as a cash payment upfront.
"We're discussing alternatives," he said, adding South Korea is targeting a summit of the Asia-Pacific Economic Cooperation (APEC) grouping hosted by the country next month, which Trump is expected to attend, to finalise the trade deal with the US.
