President Trump has delivered a stark ultimatum to South Korea, threatening to raise tariffs to 25% on key exports including automobiles, pharmaceuticals, and lumber unless Seoul’s parliament ratifies a trade agreement from last year. The announcement represents a significant escalation in tensions between the longtime allies over trade policy implementation.
The trade agreement in question was celebrated as a diplomatic achievement when finalized in October 2024 after direct talks between Trump and South Korean President Lee Jae Myung. The deal included provisions for reduced US tariffs on Korean goods and commitments by Seoul to increase investments in American industries, but has languished in legal uncertainty within South Korea’s domestic political system.
Korean officials were caught off-guard by Trump’s public announcement, with the presidential office stating it received no diplomatic advance notice. The government is now scrambling to respond, dispatching its trade minister to Washington while simultaneously working with parliamentary leaders to expedite legislation that would formalize the trade commitments.
The automotive industry represents the largest vulnerability in South Korea’s export economy, accounting for 27% of all goods sold to the United States. When Trump’s tariff threat became public, shares in major Korean automakers fell as much as 5% before partially recovering, illustrating the sector’s sensitivity to US trade policy changes.
Economic analysts characterize Trump’s approach as part of a broader strategy of using tariff threats to achieve foreign policy objectives. The Atlantic Council’s international economics chair noted that markets had incorrectly anticipated tariff stability in 2026, and the continued volatility carries significant economic costs regardless of whether specific threats are implemented.