Donald Trump has intensified pressure on South Korea with a declaration of 25% tariffs on major exports, accusing Seoul of failing to implement a trade agreement from last year. The president’s statement specifically criticized Korea’s legislature for not enacting the bilateral deal.
The trade framework was negotiated between Trump and South Korean President Lee Jae Myung in October 2024, featuring provisions for reduced American tariffs on Korean vehicles from 25% to 15%. However, the deal has become entangled in South Korean domestic political and legal disputes.
South Korea’s presidential office maintains that the agreement was structured as a memorandum of understanding not requiring legislative approval, though this interpretation is being reconsidered under pressure. Both major parties now commit to expediting five relevant bills.
The potential economic impact is significant, particularly for the automotive sector which accounts for more than a quarter of South Korean exports to the United States. When Trump’s threat became public, Korean carmaker stocks experienced sharp volatility.
This latest tariff threat exemplifies Trump’s continued reliance on trade policy as a central foreign policy instrument. While some threatened tariffs are never implemented, economists note that the unpredictability creates business uncertainty and market volatility.
