U.S. Increases Tariffs on South Korean Imports Amid Trade Agreement Delays

Trump Cites Legislative Inaction; Seoul Seeks Urgent Talks

U.S. Announces Tariff Hike

U.S. President Donald Trump announced on Monday an increase in tariffs on selected imports from South Korea. The tariffs on automobiles, pharmaceuticals, and lumber will rise from 15% to 25%.

President Trump stated that this action is due to the South Korean legislature's perceived delay in enacting a trade agreement between the two nations, which he referred to as a "Historic Trade Agreement."

This decision is attributed to delays in the South Korean legislature's approval of a bilateral trade agreement.

Background to the Trade Agreement

A trade agreement between the United States and South Korea was finalized in October of the previous year, following a meeting between President Trump and South Korean counterpart Lee Jae Myung.

This accord reportedly included a commitment from South Korea to invest $350 billion in the U.S., with some funds designated for shipbuilding projects. Under the terms of this deal, U.S. tariffs on South Korean cars were previously lowered from 25% to 15%.

The agreement was submitted to South Korea's National Assembly on November 26 of the previous year and is currently under review. Local media indicates an anticipated passage in February.

South Korea’s presidential office had initially maintained that the agreement, considered a memorandum of understanding, did not require parliamentary approval. However, South Korea’s ruling party stated its intention to collaborate with the opposition to accelerate the passage of five pending bills that would allow for the enactment of investment in the United States.

South Korea's Immediate Response

South Korea's presidential office and government bodies reported that they had not received official notification of the tariff increase. In response, South Korea requested urgent discussions with the United States.

A South Korean presidential adviser is scheduled to convene a meeting with relevant ministries to discuss the measures. Industry Minister (also referred to as Trade Minister) Kim Jung-kwan is scheduled to travel to Washington to meet with U.S. Commerce Secretary Howard Lutnick.

Economic Impact and Context

In 2024, the United States imported $131.6 billion in goods from South Korea. The auto industry constitutes 27% of South Korea’s exports to the U.S., with nearly half of the country’s car exports directed there.

South Korean-based Hyundai Motor is noted as a significant importer of new vehicles from South Korea into the U.S. Following President Trump’s announcement, shares in several South Korean carmakers experienced an initial drop of up to 5%, though they later recovered some losses.

Tariffs are defined as taxes paid by companies on imported products.

Broader U.S. Tariff Strategy

The Trump administration has utilized tariffs as a component of its foreign policy strategy. Previous instances include a threat of a 100% tariff against Canada if it pursued a trade deal with China, which Canada subsequently denied considering.

Additionally, import taxes were threatened on several countries, including the UK, that opposed U.S. plans concerning Greenland; this specific tariff threat was later withdrawn.

Economists have expressed concerns regarding this strategy, which is also under review in an ongoing U.S. Supreme Court case. Josh Lipsky, chair of international economics at the Atlantic Council, commented that President Trump’s action reflects impatience with the pace of Seoul’s enactment of the framework trade agreement, noting continued market volatility.