US Hikes Tariffs on South Korea Amid Delay in Investment

Post by : Mina Rahman

President Donald Trump revealed on Tuesday that the United States and South Korea are set to collaborate on a resolution following his sudden choice to raise tariffs on South Korean imports to 25%. When queried about the increase, Trump remarked, "We'll work something out with South Korea," although he did not elaborate.

U.S. chief trade negotiator Jamieson Greer indicated that the tariff rate was previously reduced from 25% to 15% contingent upon South Korea's pledge to invest $350 billion in the U.S., enhance access for American vehicles, and eliminate certain trade barriers. However, as Greer noted, South Korea has failed to enact the necessary legislation to meet these commitments.

On social media, Trump mentioned on Monday that the tariff increase was prompted by South Korea’s parliament not upholding last year's agreement with its president. This unexpected decision has put officials in Seoul on alert as they rush to mitigate potential economic repercussions for their export-driven economy.

Greer emphasized the growing U.S. trade deficit with South Korea, which soared to $65 billion during the Biden administration, deeming it "unsustainable." Voting on the related measures by South Korea’s parliament is anticipated around February, with five bills concerning the U.S. investment plan still awaiting approval from the ruling party.

Moreover, U.S. officials have voiced concerns regarding South Korean legislation that imposes stricter regulations on digital services and online platforms, worrying that these laws may disproportionately impact American firms. Speculations arise that recent regulatory actions against Coupang, a U.S.-listed South Korean company, could have influenced the tariff increase, though South Korea’s Foreign Minister has denied any direct link.

Earlier this month, South Korea’s Finance Minister indicated that the investment initiative is set to commence shortly, yet factors such as an ongoing U.S. Supreme Court ruling on tariffs and a weakened Korean won may postpone its launch until after mid-2026.

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