South Korea US Trade Tensions Escalate Amid Tech Probe

South Korea and the United States, two allies with a long history of economic and security cooperation, now find themselves at the center of a heated dispute over trade, technology, and regulatory oversight. In the span of just a few weeks, a series of dramatic moves on both sides of the Pacific has exposed deepening mistrust and a growing sense of frustration, with each government accusing the other of unfair practices and political overreach.

On Thursday, February 5, 2026, the South Korean government sold $3 billion worth of dollar-denominated bonds. According to Bloomberg, the sale was intended to bolster the country's foreign exchange reserves amid what officials described as "global uncertainties"—a phrase that, in the current climate, covers everything from volatile markets to unpredictable trade partners. The government offered three- and five-year fixed-rate notes, which were snapped up at premiums of 9 and 12 basis points above comparable US Treasuries. The proceeds, officials said, would be funneled into South Korea’s Foreign Exchange Stabilization Fund, a financial buffer designed to weather shocks from abroad.

This financial maneuver came on the heels of an escalating trade spat between Seoul and Washington. Just last week, former President Donald Trump publicly accused South Korea of "not living up" to the terms of a bilateral trade deal concluded in October 2025. He then announced a new 25% tariff on Korean imports to the US, blindsiding South Korean officials and sending shockwaves through the business community. As reported by DW, South Korea had not yet ratified the trade agreement in its National Assembly, a step expected in late February or early March but widely seen as a formality. Under the deal, Seoul had already signaled its willingness to accept 15% tariffs on key exports—cars, pharmaceuticals, and more—in exchange for a $350 billion investment pledge in the US. The sudden hike to 25% left many in Seoul feeling betrayed.

"For the Korean government, dealing with an individual like Trump—who operates outside predictable institutional norms—is undoubtedly burdensome," Hyobin Lee, a professor at Sogang University in Seoul, told DW. "He is not always logical and is highly unpredictable, which makes him difficult to trust." Lee went on to note that, given the influence of major powers like China, Russia, and Japan, "none of them are easy counterparts," but the US's recent behavior was especially frustrating for many Koreans who had long regarded America as a reliable ally.

The frustration isn’t limited to government officials. Editorials in major South Korean English-language newspapers have been unusually blunt. The Korea JoongAng Daily declared that the Trump administration "shows little regard for allies" and lamented that Korea-US relations have resembled "a walk on thin ice" since the start of the year.

As if the trade dispute weren’t enough, a scandal involving Coupang Inc.—a Seattle-based technology and online retail company that has rapidly expanded in South Korea—has further strained bilateral relations. In November 2025, Coupang’s Korean arm confirmed that the personal data of nearly 34 million customers had been leaked, including sensitive information like phone numbers and email addresses. The fallout was immediate: Korean regulators launched a sweeping investigation, and subsidiary CEO Park Dae-jun resigned, replaced by Harold Rogers from the company’s US headquarters.

The investigation quickly became a flashpoint. Park was questioned by police on suspicion of perjury during a December National Assembly hearing, while Rogers was grilled for 12 hours last Friday on suspicion of destroying evidence related to the data breach. According to DW, the case has taken on added significance after senior US officials criticized the Korean investigation, fueling suspicions in Seoul that Washington is trying to shield a powerful American corporation from local law enforcement.

The day after Trump’s tariff announcement, US Vice President JD Vance warned South Korean Prime Minister Kim Min-seok against "penalizing" Coupang and other US tech firms. The Korea Times editorialized that Vance’s remarks amounted to "a troubling escalation" and a "blunt attempt to shield a powerful corporation from legitimate law enforcement." Sogang University’s Hyobin Lee observed that many Koreans were angered by what they saw as an arrogant and evasive attitude from Coupang’s interim CEO during his parliamentary testimony, with some perceiving it as a sign that American business interests were being put above Korean sovereignty and consumer protection.

Meanwhile, the US government has its own grievances. On February 5, 2026, the House Judiciary Committee launched a formal investigation into what lawmakers described as discriminatory treatment of American technology companies by South Korean regulators. As reported by FOX Business, the committee issued a subpoena to Coupang for documents and testimony about its experiences with South Korean authorities. Committee leaders Jim Jordan and Scott Fitzgerald said the probe would examine whether "foreign laws and enforcement actions are being used to discriminate against innovative American companies and infringe on the rights of US citizens." They cited concerns about the Korea Fair Trade Commission and other agencies imposing "punitive obligations, excessive fines, and discriminatory enforcement practices" against US firms, potentially benefiting domestic competitors.

The investigation is intended to inform potential legislation aimed at protecting US companies and citizens from what Congress describes as discriminatory foreign regulations and enforcement decisions. In a statement, Coupang said it "will fully cooperate with the US House Judiciary Committee investigation, including production of documents and witness testimony as required by the subpoena."

Back in Seoul, some analysts believe that South Korea’s government is not entirely blameless. Park Jung-won, a law professor at Dankook University, told DW that the Lee administration may have been slow to ratify the trade deal in hopes that the US Supreme Court would rule against Trump’s authority to impose the tariffs. "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 said. "The 15% tariffs was bad enough, but to now have that at 25% is going to cause serious problems for many Korean companies."

On top of these tensions, the US Treasury Department has placed the South Korean won on its monitoring list for possible currency manipulation, adding another layer of suspicion and complexity to an already fraught relationship.

As both governments scramble to manage the fallout—South Korean Foreign Minister Cho Hyun recently held talks with US Secretary of State Marco Rubio in Washington—the underlying issues remain unresolved. The disputes over tariffs, regulatory investigations, and the treatment of multinational tech firms have exposed cracks in a relationship that, for decades, was seen as a model of alliance and mutual benefit. With billions of dollars, millions of jobs, and the future of digital commerce at stake, both sides are under pressure to find common ground before the rift widens further.

For now, the sense of uncertainty lingers, with officials and business leaders alike watching closely to see whether cooler heads will prevail or if the chill in Korea-US relations will become the new normal.