US President, Donald Trump, has declared a tariff hike to 25% on South Korean merchandise, citing Seoul's failure to honour the terms of a bilateral trade pact established in 2025, BBC reports. This escalation raises levies from the previous 15% across several sectors, notably including medical supplies, timber, and motor vehicles. Trump utilised social media to voice his frustration, claiming that while Washington moved rapidly to lower duties as agreed, South Korean legislators have been sluggish in ratifying the deal.

For an export-reliant economy like South Korea, these barriers threaten the stability of its most vital industrial sectors and test the resilience of its long-standing security and economic alliance with the US.

In response, Seoul indicated it had received no formal notification of these changes and requested immediate dialogue with US officials. Kim Jung-kwan, the South Korean Industry Minister, is scheduled to travel from Canada to Washington for an emergency meeting with US Commerce Secretary Howard Lutnick. Last year, South Korea’s shipments to the US totalled roughly $123bn, with the automotive sector alone contributing $30bn, trailing only China as a primary export destination.

According to the BBC, financial markets initially reacted with volatility; shares in Hyundai and Kia dropped by 6% before rebounding to finish January 27 nearly flat. The Kospi index similarly recovered to end the session 2.7% higher. Market observers remain doubtful that the 25% rate will be enforced, recalling Trump’s recent withdrawal of tariff threats against European nations regarding the Greenland dispute.

The underlying agreement, signed in October, involved a pledge from Seoul to direct $350bn into US ventures, including maritime construction. Although the pact reached the National Assembly on November 26, local reports suggest a vote is not expected until February. This strategy mirrors recent threats against Canada and various NATO allies, illustrating a pattern of using economic pressure to dictate foreign policy.