President Donald Trump announced on Monday an increase in tariffs on South Korean imports, specifically targeting the automotive, lumber, and pharmaceutical sectors, raising them to 25%. This decision comes amid criticism of South Korea’s legislature for not enacting a trade agreement with Washington.
“South Korea’s Legislature is not living up to its Deal with the United States,” Trump expressed via social media. He elaborated, “Because the Korean Legislature hasn’t enacted our Historic Trade Agreement, which is their prerogative, I am hereby increasing South Korean TARIFFS on Autos, Lumber, Pharma, and all other Reciprocal TARIFFS, from 15% to 25%.”
The timing of the tariff increase remains unclear, and the specific reasons behind Trump’s directive were not immediately detailed. In response, South Korea’s financial markets reacted negatively, with the benchmark KOSPI index dropping 0.7% in early trading on Tuesday, and the won depreciating by 0.5% against the dollar.
The White House and the Office of the U.S. Trade Representative have yet to comment on the matter. Meanwhile, South Korea’s presidential Blue House stated that while they have not received official notification regarding the tariff hikes, Industry Minister Kim Jung-kwan, currently in Canada, plans to visit the U.S. soon to meet with Secretary of Commerce Howard Lutnick. Kim’s U.S. visit is scheduled for January 28-31.
Despite the lack of immediate comment from South Korea’s ruling Democratic Party, the Blue House noted that a presidential adviser would consult with relevant ministries to discuss potential responses. The South Korean National Assembly typically approves bills during scheduled sessions, with the next review set for February 3.
Trump has previously suggested other tariff increases, occasionally delaying or not implementing them. South Korea’s exports to the U.S. declined by 3.8% in 2025, despite reaching a record high overall. Notably, auto exports to the U.S. totaled $30.2 billion, though they decreased by 13.2% from 2024.
A framework agreement between the U.S. and South Korea, established last year, had set tariffs on U.S. imports of Korean autos and parts at 15%, effective November 1. A potential tariff hike could significantly impact South Korean automakers Hyundai Motor and Kia, both of which experienced share declines of 3.5% and 4.8%, respectively, in early trading on Tuesday. General Motors, which produces a significant number of vehicles in South Korea, also refrained from commenting immediately.
Efforts by South Korea to implement the trade deal with the U.S. have been ongoing, with the U.S. expressing frustration over the pace of progress. Part of the bilateral agreement includes a $350 billion South Korean investment in U.S. strategic sectors, with $200 billion in cash installments capped at $20 billion annually to stabilize the won.
South Korea’s Finance Minister, Koo Yun-cheol, indicated plans to expedite the investment package, while noting potential delays due to an expected U.S. Supreme Court ruling on Trump’s tariffs. Koo’s remarks may have influenced Trump’s recent social media statements, according to Yoo Ji-woong, a senior analyst at Daol Investment & Securities.
The prospect of significant currency outflows amid a weakened won poses challenges for South Korean authorities. The finance ministry has stated its intention to actively engage with parliament on the U.S. investment bill, with Koo seeking legislative cooperation.
Trump’s tariff strategy has disrupted global trade patterns, contributing to shifts in trading relationships and potential increases in U.S. inflation. The U.S. Supreme Court is currently assessing the legality of Trump’s use of the International Emergency Economic Powers Act of 1977 for implementing country-specific tariffs, with a decision expected by mid-February.
Josh Lipsky, chair of international economics at the Atlantic Council, noted that Trump’s actions demonstrate impatience with South Korea’s implementation of the trade framework. He emphasized the ongoing uncertainty surrounding tariff rates, highlighting the volatility in global markets.
“It’s just another reminder that the markets were wrong to believe we were going to get into tariff stability in 2026,” Lipsky commented. “People say, ‘Oh, but he doesn’t follow through,’ and sometimes that’s true, but sometimes it isn’t. And the volatility alone – there is a price around that.”
