President Trump has threatened to raise tariffs on South Korean goods to 25% from the current 15%, accusing Seoul’s legislature of breaking commitments made in a trade agreement negotiated just months ago. The announcement specifically targets Korean automobiles, lumber, and pharmaceutical products entering the American market.
The threat comes despite a comprehensive trade and security deal struck between Washington and Seoul in October 2024 following direct negotiations between Trump and South Korean President Lee Jae Myung. That agreement included substantial investment promises from South Korea and reciprocal tariff reductions by the United States, bringing duties on Korean cars down from 25% to 15%.
South Korea’s government has found itself in a difficult position, with the presidential office having previously declared that parliamentary approval was unnecessary for the agreement’s implementation. However, political pressure is mounting, and the ruling party now says it will collaborate with opposition parties to pass five bills that would fulfill South Korea’s obligations under the deal.
The automotive sector faces the most significant exposure to Trump’s tariff threat, as it constitutes more than a quarter of all South Korean exports to America. The immediate market reaction saw Korean carmaker stocks drop sharply before partially recovering, reflecting investor uncertainty about whether Trump will follow through on his latest warning.
International economics experts note that Trump’s approach continues a pattern of using tariff threats as diplomatic leverage throughout his second presidential term. The volatility created by these sudden policy shifts concerns economists who worry about long-term damage to international trade relationships and market stability.