The US president has accused South Korea of stalling a “historic” trade agreement
President Donald Trump announced a sudden increase in tariffs on key South Korean imports, including automobiles, lumber and pharmaceuticals, raising duties from 15% to 25%.
The decision, communicated via his Truth Social platform on Monday, directly accuses the South Korean legislature of failing to ratify a “historic” trade and investment agreement that was finalized with President Lee Jae Myung in October 2025.
Trump stated that while the US had swiftly reduced its tariffs as part of the deal, Seoul had not lived up to its commitment, necessitating the punitive measure.
“President Lee and I reached a Great Deal for both Countries... Why hasn’t the Korean Legislature approved it?” Trump wrote.
Read more US ally warns investment demand could spark financial crisisSouth Korea’s presidential office said it has yet to receive any official notification from Washington and announced that the trade minister would travel to the United States for urgent discussions.
The crisis centers on a deal first announced in July 2025, which offered to lower US tariffs from 25% to 15% in exchange for substantial South Korean concessions, including a pledge to invest $350 billion in the United States. However, the deal has been stalled in South Korea’s National Assembly, where it faces significant political and economic scrutiny.
President Lee Jae Myung has publicly warned that the investment demand, particularly if fulfilled in cash, could trigger a severe liquidity crisis. He has drawn parallels to the 1997 Asian Financial Crisis, during which South Korea nearly exhausted its foreign currency reserves and required a major International Monetary Fund bailout.
Read more EU freezes US trade deal over Trump threatsThis move against a major Asian ally is consistent with Trump’s broader “America First” trade strategy, which uses the threat of steep tariffs as leverage to secure investment pledges and favorable terms from trading partners.
Similar tactics have been employed in negotiations with the European Union, which pledged to invest $600 billion in the US and purchase $750 billion worth of American energy. Last week, the European Parliament halted approval of the deal, citing Trump’s “continued and escalating threats” against the bloc, including his plan to annex Greenland.
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