United States President Donald Trump said on Monday (Jan 26) that his administration would raise tariffs on imports from South Korea, including automobiles and other major goods, accusing Seoul’s legislature of failing to implement a trade framework agreed between the two leaders last year. The move has heightened economic and political uncertainty for South Korea as it seeks to manage a vital alliance under renewed pressure from Washington.
In a post on social media, Trump said that South Korea had not fulfilled its part of a deal reached in principle in July 2025, under which Seoul agreed to invest heavily in the United States in exchange for reduced tariffs on its exports.
“President Lee and I reached a Great Deal for both Countries on Jul 30, 2025 and reaffirmed these terms during my visit to Korea on Oct 29, 2025,” Trump wrote. “Because the South Korean legislature has not enacted this agreement, I am hereby increasing South Korean tariffs on autos, lumber, pharma, and all other reciprocal tariffs, from 15 per cent to 25 per cent.”
The White House did not immediately clarify when the higher tariffs would take effect, nor did the Office of the US Trade Representative respond to requests for comment.
South Korean officials said the announcement came without formal notice, leaving policymakers scrambling to assess the impact. The presidential Blue House said the country’s industry minister, currently attending meetings in Canada, would travel to Washington in the coming days to meet US Secretary of Commerce Howard Lutnick. Senior advisers were expected to convene an emergency meeting with relevant ministries to formulate a response.
The tariff escalation marks the latest challenge for President Lee Jae Myung’s administration as it navigates a delicate balance between maintaining the security alliance with Washington and protecting South Korea’s export-driven economy. Trump’s decision also underscores the unpredictability that has characterized US trade policy since he began his second term in 2025.
Analysts said the move appeared designed to apply political pressure on Seoul rather than reflect a sudden breakdown in talks. Choi Seok-young, a former South Korean trade negotiator, described Trump’s announcement as “a tactic of maximum pressure aimed at extracting concessions during ongoing negotiations over non-tariff barriers.”
One possible trigger, according to a source familiar with bilateral discussions, was recent South Korean regulatory action against Coupang, a US-listed e-commerce company. US officials have raised concerns about what they view as discriminatory regulations affecting American technology firms, an issue that has been folded into broader trade negotiations.
Financial markets reacted sharply but briefly. South Korea’s benchmark Kospi index fell as much as 1.19 per cent in early trading before rebounding to close up 1.3 per cent. The won weakened about 0.5 per cent against the US dollar, reflecting investor unease over potential capital outflows and trade disruptions.
Automakers were initially hit hardest. Shares of Hyundai Motor and its affiliate Kia dropped 4.8 per cent and 6 per cent, respectively, before recovering much of their losses. Hyundai ended the session slightly higher, while Kia remained modestly lower. Neither company immediately commented on the tariff increase.
The auto sector is particularly vulnerable. South Korea exported US$30.2 billion worth of vehicles to the United States in 2025, accounting for roughly a quarter of its total shipments to the US and making automobiles the country’s largest export category to that market. Although auto exports fell 13.2 per cent from the previous year, the US remains a crucial destination.
Under the leaders’ agreement last year, tariffs on South Korean autos and auto parts had been reduced to 15 per cent from 25 per cent, placing Korean manufacturers on equal footing with Japanese competitors. That lower rate took effect on Nov 1, 2025. Trump’s announcement would reverse those gains if implemented.
US automaker General Motors, which produces about 500,000 vehicles annually in South Korea and exports most of them to the United States, also declined to comment.
Beyond tariffs, the dispute threatens to complicate a massive investment pledge at the heart of the deal. Seoul committed to investing US$350 billion in US strategic industries, including semiconductors, energy and advanced manufacturing. Of that total, US$200 billion was to be paid in phased cash installments, capped at US$20 billion annually to limit pressure on the won.
South Korean Finance Minister Koo Yun-cheol said earlier this month that the government intended to move forward with the investment plan as soon as possible, while cautioning that currency weakness and legal uncertainty in the United States could delay implementation. He noted that a pending US Supreme Court ruling on Trump’s tariff authority could affect the timetable.
The won has fallen to levels not seen since the global financial crisis of 2007–2009, raising concerns about financial stability if large capital outflows occur. Koo said it was unlikely the investment program would begin in the first half of 2026.
South Korea’s finance ministry said on Tuesday it would intensify consultations with parliament, which is set to begin a new session on Feb 3. Parliamentary approval is required to enact key components of the trade framework.
Josh Lipsky, chair of international economics at the Atlantic Council, said Trump’s action highlighted his frustration with the pace of implementation while reinforcing broader market uncertainty.
“It’s another reminder that expectations of tariff stability in 2026 were premature,” Lipsky said. “Trade policy under this administration remains highly fluid.”
Trump has repeatedly reshaped global trade dynamics by imposing or threatening tariffs on allies and rivals alike, sometimes reversing course or delaying enforcement. For South Korea, the latest move adds urgency to already complex negotiations with its most important security partner—and raises fresh questions about the durability of last year’s deal.
