Trump Escalates Trade War, Slaps 25% Tariffs on South Korean Imports
The United States is poised to escalate trade tensions with South Korea after President Donald Trump announced plans to increase tariffs on Korean imports to 25%, citing Seoul's failure to expedite approval of a bilateral trade agreement reached last October.In a social media post, Trump declared he would raise levies from the current 15% across multiple sectors including automobiles, lumber, pharmaceuticals, and other products subject to reciprocal tariffs. The move targets South Korea's $123 billion annual export market to the US, with automotive exports alone accounting for approximately $30 billion."South Korean lawmakers have been slow to approve the deal while we have acted swiftly to reduce our tariffs in line with the transaction agreed to," Trump stated, signaling growing impatience with Seoul's legislative process.The announcement sent immediate shockwaves through Korean financial markets, with shares of automotive giants Hyundai and Kia initially plummeting up to 6% before recovering to close down just 1%. The benchmark Kospi index reversed early losses to end 2.7% higher, suggesting investor skepticism about the tariff threat's implementation.Seoul responded swiftly, with officials stating they had received no formal notification of the tariff increase and requesting urgent consultations with Washington. Industry Minister Kim Jung-kwan, currently in Canada, is expected to travel to Washington immediately to meet with US Commerce Secretary Howard Lutnick.The dispute centers on a comprehensive trade agreement submitted to South Korea's National Assembly on November 26, which includes Seoul's commitment to invest $350 billion in the US economy, with significant allocations for shipbuilding infrastructure. Local media reports suggest parliamentary approval is likely by February.Market analysts view the tariff threat as potentially more symbolic than substantive. "With a delegation on its way from Seoul to Washington, markets are viewing this latest twist as more carrot than stick," noted Derren Nathan, head of equity research at Hargreaves Lansdown, drawing parallels to Trump's recent reversal on European tariff threats over Greenland.The escalation represents the latest example of Trump's aggressive use of trade policy as a diplomatic tool during his second presidential term. Recent weeks have seen similar threats against Canada over potential China trade deals and European allies opposing US territorial ambitions regarding Greenland.For South Korea, the stakes are particularly high given its position as the second-largest exporter to the US market after China, making any sustained tariff increase potentially damaging to its export-dependent economy and the broader US-Korea strategic alliance.
