On Monday, January 26th, President Trump announced that the tariff on South Korean goods will be increased from 15% to 25% due to South Korea’s failure to comply with the US-South Korea trade agreement. If implemented, the new tariff may have a wide-ranging impact on major South Korean companies exporting to the United States.
President Trump posted on the “Truth Social” website, stating, “Our trade agreements are crucial to the United States. In each agreement, we have swiftly taken action to reduce tariffs based on the agreements reached. Of course, we also hope that our trading partners do the same.”
The President expressed that the South Korean parliament has not fulfilled the agreement reached with the United States. He questioned why the South Korean parliament has not yet approved the agreement made on July 30, 2025, which was beneficial to both countries and was reaffirmed during his visit to South Korea on October 29, 2025.
“Due to the South Korean parliament not yet approving our historic trade agreement (which is their responsibility), I hereby increase the tariffs on South Korean cars, timber, drugs, and all other reciprocal goods from 15% to 25%,” wrote Trump.
Trump announced a trade agreement with South Korea in July 2025, which prevented tariffs on South Korean goods from being increased from 10% to 25%. The agreement also provided preferential tax rates for imported goods such as cars.
According to data from the US Department of Commerce, South Korea is one of the largest foreign sources of goods for the United States, with South Korea’s exports to the US possibly reaching $132 billion in 2024. Major products exported from South Korea to the US include automobiles and parts, semiconductors, and electronic products. The prices of these goods may increase due to the higher tariffs.
The tariff hike will also have a significant impact on major South Korean companies exporting to the US, such as Hyundai Motor Company, which exported 1.1 million cars to the US in 2024.
Last year, the US and South Korea announced that as part of South Korea’s $350 billion strategic investment in the US, South Korea would gradually pay $200 billion in cash, with an annual payment cap of $20 billion, to maintain the stability of the South Korean won exchange rate.
However, earlier this month, the South Korean Finance Minister stated that due to the weakness of the South Korean won, the plan to invest $350 billion in strategic industries in the US as outlined in the trade agreement is unlikely to be initiated in the first half of 2026.