On Monday, U.S. President Donald Trump announced that South Korea’s National Assembly has failed to implement the trade agreement, threatening to increase tariffs on various items, including automobiles, from 15% to 25%.
While no specific timeline was provided for these tariffs, the threat alone is likely to create significant uncertainty for South Korea’s trade relations with the U.S. in the near future.
Trump stated in a post on his social media platform Truth Social that the trade agreement is crucial to the U.S. It has swiftly reduced tariffs as agreed upon in the deal.
He expressed expectations that trading partners would reciprocate but accused the South Korean National Assembly of not properly enforcing the trade agreement with the U.S.
Trump continued that President Lee Jae Myung and him signed an excellent trade agreement benefiting both countries on July 30, 2025, which he reaffirmed during his visit to Korea on October 29, 2025. Why hasn’t the South Korean National Assembly ratified this agreement?
He declared that as a result, he’s raising all mutual tariffs on automobiles, timber, pharmaceuticals, and all other goods from 15% to 25% because the South Korean National Assembly has failed to legislate our historic trade agreement.
Trump did not specify when the tariffs would take effect or provide any additional details. It’s worth noting that while the Trump administration previously announced tariffs on timber and pharmaceuticals for all imports, these have not yet been implemented.
This latest tariff threat appears to reverse the trade agreement reached last year, which had reduced mutual tariffs and automobile tariffs from 25% to 15%.
In July of last year, South Korea agreed to lower mutual tariffs and automobile tariffs to 15% in exchange for a total investment of 350 billion USD in U.S. strategic industries. Of this, they agreed to pay 200 billion USD, in annual installments capped at 20 billion USD.
Recent speculation suggests that the South Korean government’s indication of delaying this year’s 20 billion USD investment due to the weakening won may be a contributing factor to Trump’s announcement.
The South Korean National Assembly is currently discussing a special law for Strategic Investment Management between South Korea and the U.S. that includes details of this investment. Critics argue that delays in processing this bill are causing setbacks in the investment.
As the value of the won has recently dropped to its lowest level since the global financial crisis, concerns about capital outflows have risen, preventing the government from finalizing the timeline for the U.S. investment.
Deputy Prime Minister and Minister of Finance and Economy Koo Yun-cheol stated earlier this month that the likelihood of the 350 billion USD investment beginning in earnest in the first half of this year is low due to the weak won.
The Memorandum of Understanding on Strategic Investment between South Korea and the U.S. agreed upon last year includes provisions allowing for adjustments to the timing or scale of contributions if concerns arise about foreign exchange market instability.
Consequently, dissatisfaction over the delay in U.S. investments seems to have translated into pressure for tariff increases. Josh Lipsky, director of the Atlantic Council’s International Economics Program, analyzed that this action reflects Trump’s frustration with the pace of South Korea’s compliance with the trade agreement.
Additionally, some speculate that Trump’s administration’s recent concerns over the South Korean National Assembly’s passage of amendments to the Telecommunications Act—citing restrictions on free speech and discrimination against American tech companies—along with criticism from U.S. politicians regarding the Coupang data breach, may be separate issues being used to exert pressure.