August M
Fresh trade tensions have emerged between the United States and South Korea after President Donald Trump announced plans to raise tariffs on a wide range of Korean goods. The move adds to uncertainty for exporters and markets as officials on both sides scramble to respond.
Details about the timing and scope of the increase remain unclear.
Tariff warning
President Trump said on Monday that tariffs on South Korean goods would rise to 25%, up from 15%. In a post on Truth Social, he blamed South Korea’s legislature for failing to pass what he described as a historic trade agreement.
“Because the Korean Legislature hasn’t enacted our Historic Trade Agreement, which is their prerogative, I am hereby increasing South Korean TARIFFS on Autos, Lumber, Pharma, and all other Reciprocal TARIFFS, from 15% to 25%,” Trump wrote.
The White House did not immediately clarify when the higher tariffs would take effect, CNN reports.
Seoul reacts
South Korea signalled it would avoid escalation. Presidential spokesperson Kang Yoo-jung said Seoul would “respond calmly” and convey “its willingness to fulfill the tariff agreement” to Washington.
At the same time, Korean officials are accelerating diplomatic efforts. Kang said the trade minister has brought forward a planned visit to the US and will meet Trade Representative Jamieson Greer, while the industry minister will also travel to Washington to meet Commerce Secretary Howard Lutnick after concluding a visit to Canada.
Market impact
Financial markets reacted swiftly to the announcement. South Korea’s benchmark Kospi index fell by more than 1% before recovering some losses in early Tuesday trading.
Shares in Hyundai dropped more than 2.2% during the session. Cars, car parts, semiconductors and electronics are among South Korea’s biggest exports to the US and are likely to be affected if higher tariffs are imposed.
According to US Commerce Department data, South Korea exported $132 billion worth of goods to the United States in 2024.
Deal under strain
Trump announced a trade agreement with South Korea in July that prevented tariffs on its goods from rising from 10% to 25%. The deal included preferential treatment for imported vehicles and other products.
The president’s ability to impose sweeping country-specific tariffs may also be tested in court. A case currently before the Supreme Court will determine whether Trump had the legal authority to introduce such measures.
If the justices rule against the administration, it could limit Trump’s ability to rapidly change tariff rates for goods from individual countries.
Wider context
The South Korea announcement follows a series of recent tariff threats by Trump, including a proposed 100% tariff on Canadian goods and an additional levy aimed at countries opposing his Greenland ambitions, which he later withdrew.
Sources: CNN, US Commerce Department
