Donald Trump has fired a warning shot at South Korea, threatening to impose 25% tariffs on major exports if Seoul fails to properly implement a trade pact from last year. The president’s announcement blamed Korea’s legislature for not enacting the bilateral agreement.
The trade framework was finalized after months of negotiations between Trump and South Korean President Lee Jae Myung in October 2024, featuring reciprocal concessions including reduced US tariffs on Korean vehicles. However, disagreements about implementation have prevented full enactment.
South Korea’s government disputes the characterization of its obligations, maintaining that the agreement was structured as a non-binding memorandum of understanding. However, political pressure is forcing reconsideration, with both parties now pledging to advance relevant legislation.
The automotive sector faces the greatest risk from potential tariff increases, accounting for 27% of South Korean exports to the United States and representing nearly half of all Korean car exports. Stock market volatility reflected investor concern about implementation.
This tariff threat fits within Trump’s broader strategy of using trade policy as diplomatic leverage in his second term. While not all threatened tariffs are implemented, the Atlantic Council’s international economics chair notes that volatility itself carries economic costs.