Donald Trump has announced plans to raise tariffs on various South Korean goods, including cars, lumber, and pharmaceuticals. He claims South Korea is not honoring a trade agreement made last year. This news briefly caused a dip in stock prices for South Korean car manufacturers.
In his social media post, Trump indicated that tariffs on South Korean exports to the U.S. would increase from 15% to 25%. He pointed out that South Korea’s legislature has not yet enacted what he calls a “Historic Trade Agreement.” The U.S. administration has not formally confirmed these changes yet.
South Korea’s government responded, saying they were unaware of Trump’s tariff plans. South Korea’s trade minister, Kim Jung-kwan, is currently in Canada but will head to Washington for talks with U.S. Commerce Secretary Howard Lutnick.
This announcement marks a shift from the recent trade deal reached between Washington and Seoul, which had resolved earlier tensions. The agreement, finalized after Trump met South Korean President Lee Jae Myung last October, included commitments from both sides. South Korea promised investments, while the U.S. agreed to lower tariffs.
However, the agreement has faced delays in South Korea. The presidential office stated in November that the deal does not need parliament’s approval, viewing it as more of a memorandum. But now, the ruling party plans to collaborate with the opposition to expedite pending legislation that supports U.S. investments.
Historically, tariffs on South Korean goods were significantly higher; before recent agreements, they reached 25%. The auto industry is crucial, representing 27% of South Korea’s exports to the U.S., capturing almost half of the nation’s car exports. After Trump’s announcement, shares of South Korean carmakers dropped by about 5% but later recovered.
Trump’s approach to tariffs has raised concerns among economists. Josh Lipsky, an expert in international economics at the Atlantic Council, noted that such actions reflect frustration with the slow progress in implementing the trade agreement. He cautioned that, regardless of whether Trump follows through on threats, the uncertainty affects the market.
In addition to South Korea, Trump has recently warned Canada against making a trade deal with China, threatening 100% tariffs on goods crossing the border. He has also hinted at tariffs on multiple European nations over unrelated issues.
These developments highlight the ongoing volatility in international trade relationships. As trade negotiations evolve, economic stability remains a critical concern. For the latest updates on trade policies, you can refer to reports from Reuters and the Atlantic Council.
