South Korea has said it will uphold its trade agreement with the U.S. despite President Donald Trump’s announcement of higher tariffs on South Korean goods.
On Monday (26 January), President Trump accused Seoul’s legislature of failing to approve a previously agreed trade deal between the two countries.
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.
Presidential spokesperson Kang Yu-jung said Seoul would respond “calmly”, noting that any tariff increase would require administrative procedures before taking effect.
“The government will convey its commitment to implementing the deal to the US side,” Kang said.
The government has not yet received official notification from Washington and plans to reaffirm its commitment to the deal.
Trump and South Korean President Lee Jae Myung struck a deal in principle last July for Seoul to initiate investments in the U.S. worth $350 billion in return for a U.S. promise to cut tariffs on its exports.
"President Lee and I reached a great deal for both countries on 30 July 2025 and we reaffirmed these terms while I was in Korea on 29 October, 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%."
The countries have been in talks to address Washington's concerns about regulations on U.S. tech firms as part of the trade deal.
Choi Seok-young, a former South Korean trade negotiator, said Trump's message 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."
The White House and the U.S. Trade Representative's office did not immediately respond to requests for comment.
South Korea's presidential Blue House said the industry minister, Kim Jung-Kwan currently in Canada, would visit the U.S. soon and meet with Secretary of Commerce Howard Lutnick.
A spokesperson for South Korea's ruling Democratic Party had no immediate comment. The country's parliament is due to begin a new session on 3 February, when bills are usually taken up for votes.
South Korea's exports hit a record $709.4 billion in 2025, up 3.8% from 2024, while U.S.-bound shipments stood at $122.9 billion, down 3.8% but still making it the second-biggest market after China.
Auto exports to the U.S. stood at $30.2 billion, accounting for 25% of the total U.S. shipments, the biggest of any South Korean sector, but down 13.2% from 2024.
Higher tariffs would hit South Korean automaker Hyundai Motor and its affiliate Kia particularly hard, with their shares initially falling 4.8% and 6%, respectively, before recovering to trade 0.4% higher and 1.2% lower.
Under the deal struck last year, South Korea committed to invest $350 billion into U.S. strategic sectors. Of that, $200 billion would be paid in cash in phased installments that would be capped at $20 billion a year in an effort to maintain won stability.
The prospect of large currency outflows has caused headaches for authorities in Seoul at a time when the won has slumped to trade at levels unseen since the global financial crisis from 2007 to 2009.
South Korea's finance ministry said on Tuesday it would actively consult with parliament on the U.S. investment bill. Koo was already planning to ask parliament for cooperation on the matter on Tuesday afternoon, the ministry said.
Josh Lipsky, chair of international economics at the Washington-based Atlantic Council, said Trump's action reflected his impatience with the pace of Seoul's enactment of the framework trade agreement, while underscoring ongoing uncertainty about tariff rates.
"It's just another reminder that the markets were wrong to believe we were going to get into tariff stability in 2026," Lipsky said.
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