South Korea scrambled on Tuesday to assure the U.S. it remained committed to implementing a trade deal after President Donald Trump said he would hike tariffs on autos and other imports from its ally, blaming a delay in enacting the pact agreed last year, Reuters reported.
Trump said on Monday that South Korea's parliament was not living up to its side of the deal by swiftly enacting the agreement he reached with President Lee Jae Myung to make huge investments in U.S. business projects in return for tariff cuts.
For South Korea, the decision, which officials in Seoul said caught them by surprise, is the latest setback as it tries to navigate the alliance and trade partnership amid potential challenges to its security and financial stability posed by Trump's demands.
Trump and Lee struck a deal in principle last July for Seoul to make $350 billion of investments in the U.S., despite concerns over the impact of such a large outflow from Asia's fourth-largest economy.
President Lee and I reached a Great Deal for both Countries on July 30, 2025 and we reaffirmed these terms while I was in Korea on October 29, 2025," Trump wrote on social media.
Trump said South Korea's legislature had not enacted the deal and as a result: "I am hereby increasing South Korean TARIFFS on Autos, Lumber, Pharma, and all other Reciprocal TARIFFS, from 15% to 25%."
It was not immediately clear when the hike would take effect. A source familiar with internal discussions between the countries said Trump may have been prompted by recent South Korean regulatory actions against Coupang (CPNG.N), opens new tab, a U.S.-listed e-commerce company that has protested them as unfair and discriminatory.
The countries have been in talks to address Washington's concerns about regulations on U.S. tech firms as part of the trade deal.
South Korea's presidential Blue House said it was committed to implementing the deal and would continue to take the required steps to finalise it to stave off tariff hikes.
Lee's chief policy aide convened an emergency meeting with officials and the industry minister, currently in Canada, would visit the U.S. soon and meet with Secretary of Commerce Howard Lutnick, the Blue House said.
A top trade envoy will also visit Washington soon to meet U.S. Trade Representative Jamieson Greer, it added.
The White House and Greer's office did not respond to requests for comment.
South Korea's ruling Democratic Party said five bills that would enact the U.S. investment are now pending committee review and with backing from the opposition, parliament should be able to speed up their passage. It did not give a timeline for the vote.
South Korea's benchmark KOSPI index (.KS11), opens new tab fell 1.19% before reversing early losses to trade 2.2% higher, while the won weakened 0.5% against the dollar.
Trump has upended global trade by imposing tariffs on imports from nearly every country since beginning his second term in office in 2025. In some cases, he has threatened tariff hikes and delayed them or not followed through.
Choi Seok-young, a former South Korean trade negotiator, said Trump's tariff hike threat could be seen as "a political move in which the United States is exerting maximum pressure on South Korea in an effort to force concessions during the ongoing negotiations over non-tariff barriers."
Follow the latest news on Google News
