Trump Raises Tariffs On South Korea Amid Trade Dispute

On January 26 and 27, 2026, a fresh wave of tension rippled through global markets and diplomatic circles as former President Donald Trump announced a sharp increase in tariffs on imports from South Korea. The move, which will see tariffs jump from 15% to 25% on a wide array of goods, has triggered swift reactions from Seoul, rattled financial markets, and left investors and policymakers scrambling to assess the fallout.

Trump’s announcement, made via his social media platform Truth, cited frustration with the South Korean parliament’s failure to ratify a bilateral trade agreement reached in July 2025 and reinforced during an October summit with South Korean President Lee Jae Myung. The agreement had promised mutual benefits: in exchange for a reduction of U.S. tariffs from 25% to 15%, South Korea would establish a $350 billion fund—managed by the U.S.—to invest in key sectors like shipbuilding, semiconductors, and energy. However, the deal stalled in the South Korean legislature, with five enabling bills still under discussion and a final vote not expected until February 2026.

“The parliament of South Korea is not respecting the agreement with the United States,” Trump wrote in his post, according to MT Newswire. He continued, “I am raising tariffs on cars, lumber, pharmaceuticals, and all other reciprocal tariffs from 15% to 25%.” The message was blunt, leaving little room for ambiguity about the rationale behind the move. Trump described the situation as intolerable, justifying the escalation as a necessary response to what he characterized as South Korea’s failure to uphold its end of the bargain.

The suddenness of the announcement caught both diplomats and investors off guard. According to MT Newswire and corroborated by multiple outlets, the South Korean government was not formally notified of the tariff hike. In a statement, Seoul’s presidential office emphasized, “The South Korean government intends to communicate to Washington its willingness to respect the trade agreement reached in November 2025 despite the tariff increase, responding in a calm and gradual manner.” The government also confirmed that Minister of Industry Kim Jung-Kwan would travel to Washington to initiate direct talks with the U.S. administration, seeking to clarify the situation and find common ground.

The impact on financial markets was immediate and dramatic. The main South Korean stock index, the Kospi, took a hit as shares of major automakers—particularly those with significant exposure to the U.S. market—plunged. Within the first 90 minutes of trading after the news broke, Kia’s stock dropped 2.13%, Hyundai Motor fell 0.30%, and Hyundai Mobis, a key auto parts supplier, slipped 0.48%. The South Korean won also depreciated slightly against the U.S. dollar, reflecting investor anxiety about the broader economic implications.

Analysts and commentators were quick to interpret Trump’s move as more than a simple trade measure. As reported by MT Newswire and other sources, many saw it as a calculated act of political pressure—a tactic Trump has deployed before against both rivals and allies. “This signals a more aggressive use of tariffs as a tool of foreign policy,” noted one financial analyst, referencing previous U.S. trade confrontations with Canada, Europe, and Japan. Critics of the administration warned that such measures could stoke global economic uncertainty and erode trust in multilateral trade relationships, especially among key allies.

European governments and international stakeholders have been closely monitoring the situation, wary of the precedent it might set for future trade disputes. Meanwhile, South Korea is weighing its legal and diplomatic options. The Ministry of Economy and Finance in Seoul stated that it is “evaluating Trump’s intentions” and will engage with Washington to discuss the legislative process in the National Assembly. The ministry also indicated that the tariff hike would only take effect after standard administrative procedures, including publication in the Federal Register, leaving a window for negotiation and possible resolution.

At the heart of the dispute lies a complex and delicate legislative process in South Korea. The National Assembly is expected to reconvene in early February 2026, with the ratification of the trade agreement high on its agenda. The Democratic Party, led by President Lee Jae Myung, has expressed optimism that the bills needed to enact the agreement could be voted on swiftly, perhaps within the month. If passed, these measures would allow the original tariff reduction deal to come into force, potentially defusing the standoff and restoring stability to the global supply chains that link the two economies.

The stakes are high. South Korea is the sixth-largest trading partner of the United States, and the two nations have long enjoyed a close—if sometimes complicated—economic relationship. The threatened tariff hike targets not only automobiles but also lumber, pharmaceuticals, and a range of other goods subject to reciprocal duties. The sectors involved are vital to both countries’ economies, and any prolonged disruption could have ripple effects far beyond their borders.

In the background, the episode highlights a broader trend in U.S. trade policy. Over the past year, relations between Washington and Seoul have grown more tense, with Trump’s unpredictable use of tariffs as a bargaining chip adding to the uncertainty. The July 2025 agreement, which had appeared to mark a step toward greater cooperation, now hangs in the balance as both sides maneuver for advantage.

For now, the focus shifts to the coming weeks. Observers are watching closely to see whether diplomatic efforts can bridge the gap before the tariff increase takes effect. The outcome of the South Korean parliament’s deliberations could prove decisive, not only for the immediate dispute but also for the shape of future trade relations between the two allies—and, by extension, the broader global trading system.

As the dust settles, one thing is clear: the interplay of politics, economics, and diplomacy in the U.S.-South Korea relationship remains as complex as ever, with significant consequences for businesses, consumers, and governments on both sides of the Pacific.