President Donald Trump announced an increase in import tariffs on goods from South Korea, targeting the fields of automobiles, wood, pharmaceuticals and other countervailing tariff items, with tariffs raised from 15% to 25%.
Speaking on social media, Mr. Trump criticized the South Korean National Assembly for not passing a trade agreement with the US, saying that the country's legislature has not fulfilled its commitments.
According to him, the fact that South Korea has not yet issued a historic trade agreement is the reason for the decision to increase taxes. There is no official information about the timing of the application of the new tax rate as well as the factor directly triggering this direction.
Market reaction appeared immediately after the announcement. South Korea's KOSPI index fell 0.7% in the morning trading session of January 27, while the won weakened by 0.5% against the USD. Hyundai Motor and Kia shares fell 3.5% and 4.8% respectively, reflecting concerns about the impact on businesses with a large proportion of exports to the US.
The South Korean Presidential Palace said it has not received official notification from the US about the tax increase. Minister of Industry Kim Jung-kwan is expected to visit the US and meet with Minister of Commerce Howard Lutnick, while the South Korean presidential advisor will work with relevant ministries to discuss response measures. The South Korean National Assembly usually only approves bills in regular or extraordinary sessions, with further considerations expected to begin in early February.
Within the framework of the agreement reached earlier, Washington and Seoul agreed to impose a 15% tariff on South Korean cars and car components, reduced from 25% and equal to the level applied to Japan. This tariff has taken effect, but the US is said to be dissatisfied with the implementation progress.
South Korea also pledged to invest 350 billion USD in US strategic areas, of which 200 billion USD is paid in cash at each stage.
