President Trump has slammed South Korea with a warning of 25% tariffs on major exports, accusing Seoul’s parliament of inaction on a trade agreement both countries reached last year. The threat specifically encompasses automobiles, pharmaceuticals, and lumber entering the American market.
The October 2024 trade and security agreement was finalized after intensive negotiations between Trump and South Korean President Lee Jae Myung, featuring provisions for reduced US tariffs on Korean vehicles. However, the deal has become entangled in South Korean domestic political and legal disputes.
Korean officials were taken aback by Trump’s public announcement, receiving no advance diplomatic notification. The government is responding on multiple fronts, sending the trade minister to Washington for emergency consultations while working with parliament to pass enabling legislation.
South Korea’s automotive manufacturers face substantial risk from the threatened tariff increase, as the sector exports nearly half its production to the United States and represents 27% of total Korean exports to America. Stock market volatility following Trump’s announcement reflected these economic concerns.
Trump’s approach to trade policy continues to emphasize threats and unpredictability as negotiating tactics. While some threatened tariffs are never implemented, the Atlantic Council’s international economics chair notes that volatility itself imposes costs on businesses attempting to plan for the future.