U.S. President Donald Trump announced on Monday that he would raise tariffs on South Korean imports of autos, lumber, and pharmaceuticals from 15% to 25%, citing delays in Seoul’s legislative approval of a trade deal signed last year. The move triggered initial market volatility, with South Korean automakers’ shares falling sharply before recovering, while gold and silver prices surged.
Immediate Action & Core Facts
Trump’s decision, announced via social media, targets goods including automobiles, lumber, and pharmaceuticals. The tariff hike follows a July 2025 trade agreement between the U.S. and South Korea, which included reciprocal tariff reductions and a $350 billion investment pledge by Seoul. The South Korean legislature has yet to ratify the deal, prompting Trump’s action.
South Korea’s presidential office confirmed it had not received prior notice of the tariff increase. Industry Minister Kim Jung-kwan, currently in Canada, will travel to Washington for urgent talks with U.S. Commerce Secretary Howard Lutnick.
Deeper Dive & Context
Market Reactions
South Korean stocks initially dipped but rebounded, with the KOSPI index gaining 1.2%. Automakers Hyundai and Kia saw early losses of up to 4.8% and 6%, respectively, before recovering. Gold and silver prices climbed, with gold nearing record highs at $5,063 per ounce and silver surging 5%.
Political and Legislative Response
South Korea’s ruling Democratic Party pledged to pass the trade deal by the end of February, with five related bills already submitted to the National Assembly. The opposition People Power Party also supports the legislation, increasing the likelihood of swift approval. Finance Minister Koo Yun-cheol urged parliamentary cooperation, while the trade ministry emphasized ongoing communication with the U.S.
Background and Implications
The July 2025 trade deal, reaffirmed during Trump’s October visit to South Korea, aimed to reduce U.S. tariffs on South Korean goods in exchange for Seoul’s investment commitments. The agreement was submitted to South Korea’s National Assembly in November and is expected to pass in February. Analysts note that auto export tariffs to the U.S. were previously set at 15%, with the latest hike reversing earlier reductions.
Trump’s tariff strategy has been a recurring tool in his foreign policy, with recent threats against Canada and China. The move underscores ongoing tensions over trade deal implementation and highlights the volatility of U.S. trade policy under his administration.