Donald Trump has pummeled South Korea with a plan to impose 25% tariffs on major exports, accusing Seoul of inaction on implementing a trade deal negotiated last year. The president’s social media announcement specifically criticized Korea’s legislature for not enacting what he termed a historic bilateral agreement.
The trade and security agreement was celebrated as a major diplomatic achievement when finalized between Trump and South Korean President Lee Jae Myung in October 2024. The deal included reciprocal concessions with reduced American tariffs and Korean investment promises, but has since become entangled in domestic political disputes.
South Korea’s government disputes the need for legislative ratification, initially characterizing the agreement as a non-binding memorandum of understanding rather than a formal treaty. However, mounting political and diplomatic pressure is forcing reconsideration, with both major parties now pledging to advance five related bills.
The automotive sector faces the most significant exposure to potential tariff increases, as it represents more than a quarter of South Korean exports to the United States. When Trump’s tariff threat became public, shares in major Korean carmakers fell as much as 5% before recovering some losses later in the trading day.
This tariff threat fits within Trump’s broader pattern of using trade policy as diplomatic leverage in his second term, including recent warnings to Canada and European nations. The Atlantic Council’s international economics chair notes that markets incorrectly assumed tariff stability in 2026.