South Korea Faces Rising Tensions With US Over Trade And Tech

South Korea and the United States, long-time allies and major trading partners, are facing a period of heightened tension and uncertainty as a series of trade, regulatory, and diplomatic disputes have come to a head in early 2026. The latest developments have not only unsettled financial markets but also sparked frustration in both capitals, raising questions about the future direction of the relationship and the ability of both sides to navigate a complex global landscape.

On February 5, 2026, South Korea took decisive action to shore up its economic defenses, selling $3 billion in dollar-denominated bonds. According to a report by Bloomberg, the government priced three- and five-year fixed-rate notes, which sold at premiums of 9 and 12 basis points above comparable U.S. Treasuries, respectively. The proceeds from the sale are earmarked for South Korea’s Foreign Exchange Stabilization Fund, a move designed to bolster the country’s reserves amid global uncertainties and the fallout from recent trade disputes.

This financial maneuver comes on the heels of a dramatic escalation by U.S. President Donald Trump, who last week accused Seoul of “not living up” to a bilateral trade agreement concluded in October 2025. Trump’s administration announced a sweeping new 25% tariff on South Korean imports, blindsiding officials in Seoul and sending shockwaves through the country’s export-dependent economy. As reported by DW, the legal ratification of the trade agreement in South Korea’s National Assembly had been expected as a formality in late February or early March, with Seoul already signaling its willingness to accept a 15% tariff on key exports such as cars and pharmaceuticals. In return, South Korea had pledged a staggering $350 billion investment in the United States.

The abrupt hike to a 25% tariff has left many in South Korea feeling betrayed and frustrated, especially given the country’s longstanding alliance with the U.S. “For the Korean government, dealing with an individual like Trump — who operates outside predictable institutional norms — is undoubtedly burdensome,” said Hyobin Lee, a professor at Sogang University in Seoul, speaking to DW. “He is not always logical and is highly unpredictable, which makes him difficult to trust.” Lee added, “In such circumstances, it is certainly frustrating that even the United States — long regarded as our ally — is behaving this way.”

Adding to the sense of unease, the U.S. Treasury Department placed the South Korean won on its monitoring list for possible currency manipulation last week. This move, viewed by many as aggressive, further complicated the diplomatic landscape. South Korean Foreign Minister Cho Hyun rushed to Washington and met with U.S. Secretary of State Marco Rubio on February 3, 2026, in an effort to explain the ratification process and calm tensions. Whether these efforts will sway the U.S. administration remains to be seen.

The strain is not limited to trade and currency issues. A high-profile data breach at Coupang, a Seattle-based e-commerce and technology giant with significant operations in South Korea, has become a flashpoint in the bilateral relationship. As reported by DW, the Korean arm of Coupang disclosed in November 2025 that the personal data of nearly 34 million customers had been leaked, including sensitive information such as phone numbers and email addresses. The revelation led to intense scrutiny from Korean regulators and the resignation of subsidiary CEO Park Dae-jun, who was replaced by Harold Rogers from the company’s U.S. base.

Investigations into the breach have been contentious. Park was questioned by police on February 3, 2026, on suspicion of perjury during a National Assembly hearing, while Rogers was interviewed for 12 hours the previous day on suspicion of destroying evidence related to the incident. The case has become particularly controversial amid allegations that senior U.S. officials are attempting to interfere with or strong-arm the Korean investigation. The day after the tariff hike, U.S. Vice President JD Vance warned South Korean Prime Minister Kim Min-seok against “penalizing” Coupang and other American tech firms.

This intervention drew sharp criticism in the Korean press. An editorial in the Korea Times described Vance’s remarks as “a troubling escalation,” arguing, “Framed publicly as a call to avoid ‘discriminatory’ treatment of U.S. companies, the intervention appears, upon closer inspection, to be a blunt attempt to shield a powerful corporation from legitimate law enforcement.” According to Sogang University’s Lee, many Koreans were angered by what they saw as an arrogant attitude from Coupang’s interim CEO and a dismissive approach to Korean lawmakers. “Many citizens likely felt both anger and despair,” Lee noted.

Meanwhile, in the United States, lawmakers have taken notice of the regulatory scrutiny facing Coupang and other American firms in South Korea. On February 5, 2026, the U.S. House Judiciary Committee launched a formal investigation into whether South Korean laws and enforcement actions are being used to target U.S. companies and undermine their global competitiveness. As reported by Fox Business, the committee issued a subpoena to Coupang, seeking documents and testimony regarding its experiences with South Korean regulators. Committee Chairman Jim Jordan and Subcommittee Chairman Scott Fitzgerald stated that the probe would examine “how and to what extent foreign laws, regulations, and judicial orders are being used to discriminate against innovative American companies and infringe on the rights of U.S. citizens.”

The committee’s concerns include what it describes as “punitive obligations, excessive fines, and discriminatory enforcement practices” by agencies such as the Korea Fair Trade Commission. Recent regulatory actions against Coupang, particularly in the wake of the data breach, are cited as examples of broader issues affecting U.S. firms operating in South Korea. In response, a spokesperson for Coupang said, “Coupang will fully cooperate with the U.S. House Judiciary Committee investigation, including production of documents and witness testimony as required by the subpoena.”

Some observers in South Korea acknowledge that their own government may have contributed to the current predicament. Park Jung-won, a law professor at Dankook University, told DW, “Korean people have been stunned by Trump’s aggressive style of diplomacy, even towards America’s allies,” but added, “I believe the Lee administration has not hurried the legislation to formalize the tariffs because they were hoping that the U.S. Supreme Court would rule that Trump does not have the authority to impose them. I think it is very possible that Korea has been trying to delay the decision, which now leaves Lee in a very difficult position.” Park warned, “The 15% tariffs was bad enough, but to now have that at 25% is going to cause serious problems for many Korean companies.”

As both sides dig in, the future of Korea-U.S. economic and diplomatic relations remains uncertain. With global financial markets watching closely and businesses on both sides of the Pacific facing real consequences, the coming weeks will be critical in determining whether cooler heads can prevail — or whether this period of tension will mark a turning point in one of Asia’s most important partnerships.