President Donald Trump announced on Tuesday that the United States and South Korea would resolve any issues regarding increased tariffs from 15% to 25%. The US had reduced its tariff rate on South Korean goods from 25%, in exchange for Seoul’s commitments such as investing $350 billion into the US, allowing more US cars into South Korea, and eliminating some non-tariff barriers.
However, sources reported that South Korea has failed to pass bills related to these investments. Additionally, Trump cited lack of commitment regarding agriculture, industry, and digital services. He also mentioned the Biden administration’s trade deficit with South Korea had ballooned to $65 billion over the previous year, which is “not sustainable.”
In response, Trump threatened to increase tariffs on auto imports from South Korea, leading officials in Seoul to scramble for a reaction. They noted that a US plenary session of parliament wouldn’t convene until February, and five bills are pending for approval.
The United States has expressed concerns over a Korean law that tightened oversight of digital services and another proposed legislation aimed at regulating online platforms. This could discriminate against U.S. companies, creating barriers in the process. A source within the two countries suggested Trump may have been prompted by recent regulatory actions taken against Coupang, an American-listed firm operating in South Korea.
South Korean Foreign Minister Cho Hyun stated that Seoul had communicated with the US State Department regarding Trump’s tariff threats but found no direct link to Coupang or the proposed online platform law. In a different context, Finance Minister Koo Yun-cheol said the investment package worth $350 billion would likely not start in the first half of 2026 due to uncertainties surrounding a U.S. Supreme Court ruling on Trump’s tariffs.
Earlier this month, South Korea’s Finance Minister Koo Yun-cheol revealed that the government planned to implement the investment within the next few months, despite noting ongoing uncertainty over the process due to pending legislation and legal challenges.