U.S. Raises Tariffs to 25% on South Korean Goods After Trade Deal Stalls

According to President Trump, the tariff increase is a direct response to South Korea’s National Assembly failing to enact the trade deal negotiated in:

• July 30, 2025, when Trump and South Korean President Lee Jae-myung reached the initial agreement, and
• October 29, 2025, when both leaders reaffirmed their commitments during Trump’s visit to Seoul.
  [cnbc.com], [cbsnews.com]

Under this deal, South Korea pledged $350 billion in U.S. investments in sectors such as semiconductors, shipbuilding, biotechnology, and other strategic industries, in exchange for the U.S. reducing tariffs on autos, auto parts, pharmaceuticals, and additional categories to 15%. However, South Korean ministers have signaled ongoing administrative constraints and currency-market volatility, which have delayed legislative approval and slowed investment readiness. [straitstimes.com], [usnews.com]

What Goods Are Affected

The tariff hike affects major export categories from South Korea, including:

• Automobiles and auto parts
• Pharmaceutical products
• Lumber
• Electronics and other manufactured goods
  [financialexpress.com], [cbsnews.com]

South Korea is one of the United States’ largest trading partners, exporting over $130 billion in goods to the U.S. in 2024, with autos alone accounting for nearly 25–27% of all South Korean exports to the American market. [financialexpress.com], [cbsnews.com]

Impact on Markets

The announcement triggered immediate turbulence in South Korean financial markets:

• The KOSPI index fell roughly 0.7% in early trading.
• The South Korean won weakened by ~0.5% against the U.S. dollar.
• Shares of major automakers dropped sharply:
  • Hyundai Motor: −3.5% to −4.7%
  • Kia: −4.8%
    [cbtnews.com], [cnbc.com]

South Korea’s presidential office stated it had not yet received formal diplomatic notification of the tariff hike but confirmed that coordination meetings are underway. Trade and industry ministers are expected to travel to Washington for direct consultations with U.S. Commerce Department officials. [cbtnews.com], [abcnews.go.com]

Wider Implications

Experts warn that the escalation underscores continuing volatility in U.S. trade policy, with potential ripple effects in:

• Auto supply chains, with South Korean brands heavily dependent on U.S. demand
• Semiconductor cooperation, a strategic priority for both countries
• Foreign exchange markets, already strained by South Korea’s weakened currency
  [straitstimes.com], [usnews.com]

The tariff move also comes amid broader global uncertainty as the U.S. considers or threatens tariff actions against multiple nations, including Canada and European states, as part of a more aggressive trade posture. [yahoo.com]

Primary Source Links

Here are the direct links to the articles used as references:

1. Yahoo News – Trump raises US tariffs on South Korean imports to 25%
   https://www.yahoo.com/news/articles/trump-raises-us-tariffs-south-232507714.html [yahoo.com]
2. ABC News – Trump threatens to hike tariffs on South Korean goods
   https://abcnews.go.com/Business/wireStory/trump-threatens-hike-tariffs-south-korean-goods-inaction-129580225 [abcnews.go.com]
3. CNBC – Tariffs on South Korean autos, pharma, to rise to 25%
   https://www.cnbc.com/2026/01/26/trump-south-korea-tariffs-trade-autos-pharma.html [cnbc.com]
4. Financial Express – Trump slaps 25% tariffs on South Korea over failure to enact trade deal
   https://www.financialexpress.com/world-news/us-news/trump-slaps-25-tariffs-on-south-korea-over-failure-to-enact-trade-deal-not-living-up-to-agreement/4120120/ [financialexpress.com]
5. CBS News – Trump says he’s raising tariffs on South Korea to 25%
   https://www.cbsnews.com/news/trump-south-korea-tariffs-25/ [cbsnews.com]
6. CBT News – U.S. hikes South Korea tariffs to 25% after trade agreement stalls
   https://www.cbtnews.com/u-s-hikes-south-korea-tariffs-to-25/ [cbtnews.com]
7. The Straits Times – Explainer: Why has Trump threatened to raise US tariffs again?
   https://www.straitstimes.com/asia/east-asia/explainer-why-has-president-trump-threatened-to-raise-us-tariffs-on-south-korea-again [straitstimes.com]
8. Reuters / U.S. News – Explainer – Why has President Trump threatened to raise US tariffs?
   https://www.usnews.com/news/world/articles/2026-01-26/explainer-why-has-president-trump-threatened-to-raise-us-tariffs-on-south-korea-again [usnews.com]