Trade tensions between the United States and South Korea have escalated after a statement from US President Donald Trump claimed that tariffs on several South Korean goods would be increased. However, the South Korean government has said it has not received any official communication from Washington regarding such a move.
What Did the Trump Say?
Trump said on Truth Social that South Korea’s legislature has not cleared an earlier trade agreement. Because of this, the US signaled tariffs on autos, lumber, pharma, and other goods may increase from 15% to 25%.
The message emphasized that the US had already reduced its tariffs under the agreement and expected trading partners to do the same. It questioned why South Korea had not formally enacted the deal through its legislative process.
How Has South Korea Responded?
South Korea’s presidential office said it has not received any official notice or formal explanation from the United States regarding new tariffs. Officials stressed that there has been no direct communication confirming the reported tariff increase.
In response, the South Korean government is preparing an interagency meeting to evaluate the situation and possible economic impacts.
What Steps Is South Korea Taking Now?
South Korea’s Industry Minister Kim Jung hwan is planning a visit to Washington. The goal of the trip is to hold discussions with US Commerce Secretary Howard Lutnick and seek clarity on the issue.
Seoul is expected to focus on maintaining trade stability and avoiding sudden disruptions that could hurt key industries.
Which Sectors Could Be Affected?
If tariffs are increased to 25%, major South Korean export sectors could face pressure, including:
- Automobiles and auto parts
- Pharmaceutical products
- Lumber and related materials
- Other manufactured goods under reciprocal trade categories
Higher tariffs would make South Korean products more expensive in the US market, potentially reducing demand and impacting company revenues.
Why Is Legislative Approval Important?
International trade deals often require approval from a country’s legislature before they become fully effective. Even if leaders reach an agreement, domestic legal processes must be completed.
The current dispute appears linked to whether South Korea’s legislature has finalized the trade agreement terms.
What Does This Mean for Global Markets?
Uncertainty around tariffs between major economies can create volatility in global markets. Investors closely watch such developments because they affect supply chains, corporate profits, and economic growth.
Any prolonged disagreement could also influence broader Asia US trade relations.
U.S. – Korea Free Trade Agreement (KORUS FTA)
The U.S.–Korea Free Trade Agreement took effect on March 15, 2012, after being signed on June 30, 2007. It reduced tariffs and improved market access between the two countries. Total U.S.–South Korea goods and services trade was about $168.6 billion in 2019, with U.S. exports at $80.5 billion and imports at $88.1 billion, resulting in a $7.6 billion overall trade deficit.
U.S. goods exports to Korea were $56.5 billion in 2019, while services exports reached $24.0 billion. Major goods exports included mineral fuels $13B, machinery $6.5B, electrical machinery $5.7B, medical and optical instruments $3.5B, and aircraft $2.5B. Agricultural exports totaled $7.6B, led by beef $1.8B, pork $593M, prepared food $509M, fruit $405M, and soybeans $396M. Services trade gave the U.S. a $13.4B surplus.
The U.S. imported $77.5B in goods and $10.6B in services from Korea. Top goods imports were vehicles $21B, machinery $15B, electrical machinery $14B, mineral fuels $4.2B, and plastics $2.9B. The U.S. goods trade deficit with Korea stood at $20.9B in 2019.
Investment ties are strong. U.S. FDI in Korea was $39.1B, while Korean FDI in the U.S. was $61.8B in 2019. U.S. exports to Korea supported about 358,000 American jobs, showing how deeply the agreement connects both economies.
Key Questions and Answers
Has the US officially raised tariffs on South Korea?
South Korea says it has not received any formal notice confirming a tariff hike.
Why are tariffs being discussed?
The issue centers on whether South Korea’s legislature has approved a previously agreed trade deal.
Who is handling discussions?
South Korea’s Industry Minister plans to meet US Commerce officials in Washington for clarification.
Which industries are most at risk?
Autos, pharmaceuticals, lumber, and other exported goods could be affected if tariffs increase.
Conclusion
The situation remains fluid, with both sides expected to engage in discussions soon. Until official communication is confirmed, markets and businesses will remain cautious.
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