President Trump has warned that tariffs on South Korean goods will increase to 25%, citing Seoul’s failure to secure legislative approval for a trade agreement negotiated in 2024. The announcement specifically targets automobiles, lumber, and pharmaceuticals, representing major segments of Korean exports to America.
The controversy stems from disagreements about the legal status and implementation requirements of the October 2024 trade framework. While Trump clearly expects full legislative ratification, South Korea’s presidential office initially maintained that parliamentary approval was unnecessary for what it characterized as a memorandum of understanding.
Korean officials expressed surprise at learning of the tariff threat through public announcements rather than diplomatic channels. Trade Minister Kim Jung-kwan is being sent to Washington for urgent consultations, while Seoul’s ruling party commits to working with the opposition to pass enabling legislation.
The automotive sector faces the most significant exposure to potential tariff increases, accounting for 27% of South Korean exports to the United States. Market reaction to Trump’s announcement was swift, with Korean carmaker stocks dropping up to 5% before recovering some ground.
Trump’s continued use of tariff threats as a foreign policy tool creates challenges for businesses and investors attempting to navigate international trade relationships. While some threatened tariffs are never implemented, the Atlantic Council’s international economics chair notes that volatility itself imposes economic costs regardless of follow-through.
