Trump’s Trade Offensive: The 25% Tariff Threat on South Korea

In January 2026, President Donald Trump threatened to raise tariffs on South Korean imports to 25%, reversing a previous reduction to 15%. This move was part of a broader series of trade escalations aimed at forcing allies to accelerate the implementation of trade agreements.

Core Reasons for the Threat

The primary driver for the tariff hike was Trump’s frustration with the South Korean National Assembly. In a post on Truth Social, he accused the legislature of failing to "live up to its deal" by not yet codifying a trade agreement reached in 2025.

· The 2025 Deal: Under a framework established the previous year, the U.S. had lowered tariffs on South Korean goods to 15%. In exchange, South Korea pledged a $350 billion investment package in the U.S. (including $150 billion for shipbuilding and nuclear submarine cooperation) and promised to reduce barriers for U.S. digital and automotive firms.

· Legislative Delay: Bills to authorize these massive investments have been stalled in the South Korean parliament since November 2025, leading Trump to declare he would "hereby increase" the rates back to 25%.

Impacted Industries

The 25% tariff would specifically target high-value South Korean exports, including:

· Automobiles: Major manufacturers like Hyundai and Kia saw their stock prices drop immediately following the announcement.

· Pharmaceuticals: Stocks for companies such as Yuhan Corp and Samsung Biologics were also rattled.

· Lumber: Though a smaller portion of trade compared to autos, it was explicitly named in the threat.

Current Status and Response

· Diplomatic Scramble: South Korea's Industry and Trade ministers were dispatched to Washington to meet with U.S. officials (including Commerce Secretary Howard Lutnick) to clarify the timeline.

· Softening Stance: Shortly after the initial threat, Trump told reporters, "We'll work something out with South Korea," suggesting the move may be a negotiating tactic to "fast-track" the legislative approval in Seoul.

· February Deadline: The South Korean legislature is now aiming to pass the required investment bills by late February 2026 to appease the administration and prevent the tariffs from being formally implemented via executive order.

· Legal Uncertainty: The threat also looms as the U.S. Supreme Court prepares to rule on the legality of the "Reciprocal Tariff" authority (specifically under the International Emergency Economic Powers Act) that the administration has used for these country-specific hikes.