Trump Raises South Korea Tariffs to 25% Over Trade Delay

President Donald Trump announced on Monday that the United States will raise tariffs on South Korean automobiles and pharmaceuticals to 25 percent. The move comes after South Korea's national assembly failed to approve a new trade deal framework with the US. Trump made the statement in a social media post, pointing to the delay as the reason for the increase from the current 15 percent rate.

Background

Trade tensions between the US and South Korea have grown over the past year. Back in August 2025, a reciprocal trade deal took effect, setting tariffs at levels matching what South Korea charges US goods. For many products, this meant rates based on South Korea's duties—zero percent for items they tax at 15 percent or more, and 15 percent minus their rate for lower ones. An update in November 2025 adjusted some details, including exemptions for aerospace parts.

South Korea's parliament, known as the national assembly, has not moved forward on ratifying the full agreement. Lawmakers there have debated the terms for months, citing concerns over market access and local industry protections. US officials have pushed for quicker action, arguing the deal levels the playing field for American workers and farmers.

Hyundai Motor, based in South Korea, stands out as the biggest sender of new cars to the US. Last year, it shipped hundreds of thousands of vehicles, making up a large share of imports from that country. Other sectors like pharmaceuticals also rely on the US market, with companies exporting drugs and medical supplies.

Trump's administration has used tariffs as a tool in talks with many nations. Deals with countries like Japan, Pakistan, and the Philippines have led to exemptions or lower rates. South Korea's slow pace, though, has set it apart, prompting this latest step.

Key Details

The new 25 percent tariff applies right away to autos and pharma products. Trump specified these sectors in his post, saying the hike addresses the assembly's inaction. Previously, under the reciprocal setup, rates varied by product—often lower than 25 percent.

Impact on Key Industries

Car makers feel the biggest pinch. Hyundai and its affiliate Kia send over a million vehicles a year to the US combined. Higher tariffs mean added costs passed to buyers or absorbed by the companies. Factories in the US, like Hyundai's plant in Alabama, might see shifts in production to dodge the fees.

Pharmaceutical exports face similar hikes. South Korea supplies active ingredients and finished drugs to US firms. This could raise prices for medicines here, affecting hospitals and patients.

Trump's post laid out the change clearly:

The United States will increase its tariff on imports from South Korea from 15% to 25% and also hike levies on automobiles and pharmaceuticals. South Korea must approve the trade deal now.

– President Donald Trump, social media post

The administration has tools to enforce this. Executive orders can list affected goods by codes, covering everything from sedans to steel parts in cars. Exemptions exist for some items, like civil aircraft parts, but autos and drugs do not qualify.

South Korea's government has responded with calls for more talks. Officials say they want a fair deal but need time to review impacts on their economy. Exports to the US make up about 15 percent of their total, so the stakes are high.

What This Means

US consumers could see car prices climb by thousands per vehicle. A typical imported sedan might add $5,000 or more at the dealer lot. Drug costs may rise too, though generics from South Korea help keep some prices down.

Hyundai has options. It builds many cars in the US already, and more plants are planned. Shifting production stateside could soften the blow, creating jobs here but raising short-term expenses.

For South Korea, the pressure mounts to act. Parliament might speed up votes to avoid broader tariffs. Other countries watching this could face similar threats if their deals lag.

Business groups in the US worry about retaliation. South Korea might raise barriers on American beef, semiconductors, or services. Past trade spats led to such moves, hurting exporters.

The White House sees this as use. By targeting key exports, it aims to force concessions. Similar tactics worked with Japan, where rates dropped after a deal.

Economists note ripple effects. Higher import costs fuel inflation in autos and health care. Supply chains tangle as firms rethink suppliers—maybe turning to Mexico or Europe.

Workers in affected US plants gain protection. Tariffs shield domestic makers like Ford and GM from cheaper imports. But parts suppliers might struggle if Korean firms cut back.

Talks continue behind closed doors. US trade reps met South Korean counterparts last week. A deal approval could reverse the hike, but timelines remain unclear.

This fits a pattern of using tariffs to renegotiate terms. Since taking office, Trump has inked pacts with over a dozen nations, often starting with threats. South Korea's case tests how far this approach goes with a close ally.

Global markets reacted mildly Monday. Seoul stocks dipped, while US futures held steady. Investors expect negotiations to drag into spring.

The auto sector braces for changes. Dealerships stock up on pre-tariff models. Buyers rush to beat price jumps, mirroring patterns from earlier trade wars.

Pharma firms scout alternatives. India and China supply similar goods, but quality checks take time. Shortages loom if transitions falter.

South Korean leaders face domestic pushback. Farmers and fishers want US market access, but manufacturers fear job losses. Parliament balances these voices amid election cycles.

US lawmakers mostly back the move. Bipartisan support exists for tough trade stances, especially on autos. Some Democrats call for worker aid if prices soar.

Longer term, this could reshape alliances. South Korea hosts US troops and shares security goals. Trade friction tests that bond.

For now, the tariffs stand. Businesses adjust, consumers watch prices, and diplomats huddle. The next assembly session could shift the path.