Donald Trump to raise tariffs on South Korea to 25%

Donald Trump has said he will increase tariffs on South Korea to 25 per cent in response to Seoul’s slow pace in enacting the trade deal it struck with the US last year.

In a post on Truth Social on Monday, the US president said the increase would apply to all goods covered by his “reciprocal” tariffs, along with cars, lumber and pharmaceutical goods.

“Our Trade Deals are very important to America,” Trump wrote. “In each of these Deals, we have acted swiftly to reduce our TARIFFS in line with the Transaction agreed to. We, of course, expect our Trading Partners to do the same.”

He added: “South Korea’s Legislature is not living up to its Deal with the United States.”

Shares in Korean carmakers Hyundai Motor and Kia fell as much as 4.6 per cent and 5.9 per cent respectively on Tuesday before paring losses amid a broader market rally. Hyundai was up 0.2 per cent in early afternoon trading while Kia was down 1.6 per cent.

The Korean currency weakened from Won1,442 per dollar to Won1,452, before moderating to trade around Won1,448.

Trump’s abrupt ratcheting up of duties on a trading partner upends the deal struck between Washington and Seoul late last year, and will rattle other countries with similar agreements. The president announced last July he would slash many tariffs on South Korea to 15 per cent, in exchange for Seoul’s pledge to invest $350bn in the US.

The deal included relief for South Korean automotive companies, with tariffs on cars and car parts cut to 15 per cent, in line with Trump’s levies on Japan and the EU. The agreement was sealed late last year after Trump visited South Korea.

Trump’s announcement caused confusion in South Korea, where the country’s economy and finance ministry said it was trying to understand “the intent” of Trump’s statement.

The office of South Korea’s President Lee Jae Myung said in a statement that “there has been no official notification or explanation of the details from the US government”.

South Korean officials believe Trump may have been referring to a bill proposed in November that would enable the $350bn investment, but which is currently stalled in the country’s National Assembly.

Lee’s ruling Democratic Party said it would seek passage of the investment bill next month, following a meeting with the finance ministry on Tuesday.

“Claims that the Korean government or the National Assembly is intentionally delaying this legislation stem from a lack of understanding of the situation,” the party said in a statement on Tuesday.

Adding to the uncertainty is the fact that the trade deal was contained in a factsheet and a memorandum of understanding, rather than a formal treaty. Korean lawmakers have also debated whether the agreement as such can be ratified as such, or needs to be enacted via separate legislation.

“I don’t blame the South Korean National Assembly for not ratifying a transposed version of the flimsy factsheet tariff ‘deal’,” said Mason Richey, professor of international politics at Hankuk University of Foreign Studies.

US officials have previously complained that other countries were not implementing agreements quickly enough. In November, one official accused the EU of “being kind of slow”.

The tariff announcement followed a tumultuous week in which Trump warned that he would impose steep levies on European countries, before backing down.

Trump will need to enact tariffs announced via Truth Social by using official avenues of presidential authority, such as an executive order. Many of his tariff announcements have been subject to challenges and could be ruled illegal by the US Supreme Court.