US President Donald Trump threatened to raise tariffs on South Korean imports to 25 percent, citing the South Korean legislature’s failure to formally enshrine the trade deal reached by the two countries last year into law.
Trump said in a social media post on Monday that the new rate would apply to automobiles, lumber, pharmaceuticals and “all other reciprocal tariffs.” Under the existing agreement, the president imposed a 15% tariff on South Korean exports.
Trump wrote in his post: “The South Korean National Assembly has not fulfilled the agreements reached with the United States. In every agreement, we have acted promptly and reduced tariffs as agreed. Of course, we also expect our trading partners to do the same.”
If implemented, this move could have a wide-ranging impact on large South Korean companies that export to the United States, such as Hyundai Motor Company, which exported 1.1 million vehicles to the US in 2024.
The domestic bill, named the “Special Act on Strategic Investment in the United States”, aims to grant the South Korean government legal authority to manage and implement the large-scale investment it committed to under the trade agreement reached with the United States last year. The bill was submitted to the National Assembly in late November and triggered a policy to retroactively lower the auto tariff from 25% to 15% in accordance with a bilateral memorandum, which took effect from early November.
The Blue House, the presidential office of South Korea, said it has not received any formal notice or detailed explanation from the US side regarding the post made by Trump on the Truth Social website. The statement said that Minister of Trade, Industry and Energy, Kim Jong-ku, who is currently in Canada, plans to visit the US as soon as possible to hold consultations with Commerce Secretary Gina Raimondo on the matter.
In addition, the Blue House plans to hold a meeting on Tuesday, which will be chaired by its policy chief and attended by relevant ministries.
The United States is South Korea’s second-largest export destination, second only to China, accounting for more than 17% of South Korea’s total exports of 122.9 billion US dollars last year. The Office of the United States Trade Representative stated that the US trade deficit with South Korea will reach 66 billion US dollars in 2024, which will be the eighth largest trade deficit between the two countries.
When the investment bill was submitted in November last year, Democratic Party lawmaker Huh Young of the ruling party said that the National Assembly had not considered accelerating the passage of the bill and had not set a specific timetable for its passage.
Senior policy leader of the ruling party, Hui Kwan Man, told reporters on November 26th: “The Congress will conduct a very meticulous and thorough review of this special law. If there are any provisions that may harm the national interests, we hope that the ruling party and the opposition can discuss together to ensure that the bill eventually becomes a more perfect law regulating investment in the United States.”
Since the bill was submitted, the review in the National Assembly has been deadlocked as the main opposition People Power Party demanded that the tariff agreement be approved before the special law is passed. The office of Finance Minister Cho Sung-wook said that he plans to meet with the chairperson of the National Assembly’s Finance Committee to seek cooperation on the legislation.
The Ministry of Finance of South Korea said in a statement, “We are currently making efforts to understand the position of the US side. We will communicate with the US government, including informing it of the progress of the discussions in the South Korean National Assembly regarding this legislation.”
Peter Kim, managing director of KB Securities in Seoul, said Trump’s latest threat is in line with his consistent trade policy that agreements are often subject to change at any time. He also pointed out that South Korea’s delay in implementing the agreement reflects the normal pace of its legislative process rather than any deliberate strategy.
Although Trump’s tariff threats were often scaled back or canceled, data compiled by Bloomberg shows that about 27% of such threats were fully implemented since the end of 2018, while the proportion of still-effective threats was relatively low, at around 20%.
