Donald Trump said he would raise tariffs on imports from South Korea to 25 per cent after accusing the Asian ally of dragging its feet on enacting a trade pact reached last year to make huge investments in U.S. business projects.
The U.S. President blamed South Korea’s National Assembly for not ratifying the trade deal he reached with President Lee Jae Myung in July which they later reaffirmed during Trump’s visit to Seoul in October.
“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 president said.
The White House has not yet issued an executive order to put the tariffs into effect as of Tuesday. But South Korea’s presidential Blue House said it was committed to implementing the deal and would continue to take the required steps to finalise it to stave off tariff hikes.
The US president imposed a 25 per cent tariff on South Korean exports to the US last year, but agreed to lower it to 15 per cent after a trade deal was agreed by the two countries. Seoul agreed to initiate investments in the US worth $350 billion in return for a promise to cut tariffs on its exports. But negotiators have continued to spar over the details of the agreement and the deal is yet to be ratified.
Trump’s decision, which South Korean officials said caught them by surprise, is the latest setback to the ties between the two allies and trade partners amid potential challenges to its security and financial stability posed by Trump’s demands.
A source familiar with internal discussions between the countries said Trump may have been prompted by the recent South Korean regulatory actions stemming from a mass data leak against Coupang, a U.S.-listed e-commerce company. Investigations, which U.S. lawmakers have called “discriminatory”, are being carried out in South Korea over the massive customer data leak. The U.S. State Department expressed “significant concerns” over Seoul’s regulatory moves that could affect online platform businesses.
Choi Seok-young, a former South Korean trade negotiator, said Trump’s message could be seen as “a political move in which the United States is exerting maximum pressure on South Korea in an effort to force concessions during the ongoing negotiations over non-tariff barriers”.
The Blue House said their Industry Minister Kim Jung-kwan, who is currently in Canada, will head to Washington to discuss the matter with U.S. Commerce Secretary Howard Lutnick.
“We are currently working to gauge the intentions of the U.S. side,” the Ministry of Economy and Finance said in a message to reporters.
“Going forward, we will engage with the U.S. government to explain developments in discussions over the legislation at the National Assembly.”
Under a deal struck last year, South Korea committed to invest $350 billion in strategic sectors in the U.S.. Of that amount, $200 billion was to be paid in cash in phased installments, capped at $20 billion a year to help maintain stability in the won.
Earlier this month, South Korea’s Finance Minister Koo Yun-cheol told Reuters the government planned to move ahead with the investment package as soon as possible, while cautioning that uncertainty surrounding an expected U.S. Supreme Court ruling on Trump’s tariffs could affect the process.
He added that the $350 billion investment was unlikely to begin in the first half of 2026, citing the weakness of the won.
