President Donald Trump announced on Monday that tariffs on South Korean goods, including autos, lumber, and pharmaceuticals, will rise from 15% to 25%.
He blamed the South Korean legislature for delaying the enactment of a trade deal agreed between the two countries in 2025.
Trump and South Korean President Lee Jae Myung struck a deal last July for Seoul to invest $350 billion in U.S. strategic sectors in return for lower tariffs on South Korean exports.
In a social media post, Trump said, “President Lee and I reached a Great Deal for both Countries on July 30, 2025 and we reaffirmed these terms while I was in Korea on October 29, 2025.” He added that South Korea’s legislature had yet to implement the agreement, prompting the tariff increase.
Tariff hike details and timing
The U.S. will increase tariffs on autos, lumber, pharmaceuticals, and other goods from 15% to 25%. It was not immediately clear when the higher rates would take effect.
The move comes amid tensions over South Korean regulatory actions against Coupang, a U.S.-listed e-commerce company, which Washington views as discriminatory.
Market reactions and industry impact
South Korea’s KOSPI index initially fell 1.19% before rebounding to trade 1.3% higher, while the won weakened 0.5% against the U.S. dollar.
The higher tariffs are expected to impact major automakers such as Hyundai Motor and Kia, whose shares initially dropped before stabilizing. Auto exports to the U.S. account for 25% of South Korea’s shipments, with Hyundai and Kia most exposed to the tariff changes.
General Motors, which exports around 500,000 vehicles annually from South Korea, also faces potential implications.
Under the 2025 deal, South Korea pledged to invest $350 billion into U.S. strategic sectors, with $200 billion paid in phased installments capped at $20 billion per year to stabilize the won.
South Korea’s Finance Minister Koo Yun-cheol said the investment package may be delayed in the first half of 2026 due to a weak won and uncertainty over a U.S. Supreme Court ruling on tariffs.
Officials in Seoul are consulting with parliament to facilitate the investment bill while monitoring the impact on currency stability.
Experts view Trump’s tariff increase as a political move aimed at pressuring South Korea to enact the trade agreement faster. Josh Lipsky of the Atlantic Council noted the action underscores ongoing uncertainty over tariff rates and signals that markets should not expect stability in 2026.
