Donald Trump has dropped a bombshell on South Korea, threatening to impose 25% tariffs on major exports unless Seoul’s legislature breaks through gridlock on a trade agreement from 2024. The president’s statement blamed Korea’s parliament for failing to enact the bilateral deal.
The trade framework was negotiated directly between Trump and South Korean President Lee Jae Myung in October 2024, including provisions for reduced US tariffs on Korean vehicles and other products. However, the deal has languished in legal uncertainty within South Korea.
South Korea’s presidential office maintains that the agreement was structured as a memorandum of understanding not requiring legislative approval, though this position is being reconsidered under diplomatic pressure. Both ruling and opposition parties now commit to expediting relevant bills.
The economic stakes are considerable, particularly for the automotive sector which exports nearly half its production to the United States and represents more than a quarter of total Korean exports to America. Stock market reaction included sharp volatility for Korean carmaker shares.
This latest tariff threat exemplifies Trump’s continued reliance on trade policy as a foreign policy instrument. Economists warn that the unpredictability creates business uncertainty and market volatility regardless of whether specific threats are ultimately carried out.