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Trump threatens South Korea with higher tariffs

Trump threatens to hike South Korea tariffs to 25% on autos and drugs, surprising Seoul, but markets stay calm as Kospi rebounds.
Published: January 27, 2026
Written by:
Mita Chaturvedi

Mita Chaturvedi

Research Associate, Flux
Mita Chaturvedi

US President Donald Trump says he will raise tariffs on certain South Korean imports, including autos and pharmaceuticals, from 15% to 25%, blaming Seoul’s legislature for delaying a trade deal agreed in principle last year.

US President Donald Trump says he will raise tariffs on certain South Korean imports, including autos and pharmaceuticals, from 15% to 25%, blaming Seoul’s legislature for delaying a trade deal agreed in principle last year. The move surprised South Korean officials, and it is still unclear when the higher tariffs would take effect.

The deal, reached in July 2025, was meant to see South Korea invest US$350 billion in the United States in exchange for lower tariffs. This includes up to US$20 billion a year in cash investments into US manufacturing capacity, the purchase of 3.3 million tonnes per year of US LNG, and closer cooperation on shipbuilding.

Markets largely shrugged off President Donald Trump’s move. Some auto stocks dipped, but South Korea’s Kospi recovered to trade higher, showing investors are increasingly learning to live with tariff risks.

Written by

Mita Chaturvedi

Research Associate, Flux
Mita Chaturvedi

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