Donald Trump has brought the hammer down on South Korea with a plan to impose 25% tariffs on major exports, accusing Seoul of legislative delays on a trade agreement from last year. The president’s announcement targeted automobiles, lumber, and pharmaceuticals.
The trade framework was finalized after months of negotiations between Trump and South Korean President Lee Jae Myung in October 2024, featuring reciprocal concessions. However, disagreements about implementation have prevented full enactment.
South Korea’s government disputes the characterization of its obligations, maintaining the agreement was a non-binding memorandum of understanding. However, political pressure is forcing reconsideration, with both parties pledging to advance legislation.
The automotive sector faces the greatest risk from potential tariff increases, accounting for 27% of South Korean exports to the United States. Stock market volatility followed Trump’s announcement.
This tariff threat fits within Trump’s broader strategy of using trade policy as diplomatic leverage. While not all threatened tariffs are implemented, the Atlantic Council notes that volatility itself carries economic costs.