【By Guan察者网, Yuan Jiaqi】
On January 26 local time, US President Trump suddenly posted on his social platform "Truth Social" announcing that the US would increase the tariff rates on South Korean goods, while accusing the South Korean National Assembly of not ratifying and implementing the trade agreement previously reached with the US. This sudden development caused chaos in South Korea, as South Koreans were unsure what had angered the US president.
South Korea quickly responded. The South Korean presidential office said it had not yet received formal notification from the US side and would hold a meeting to study countermeasures, while sending the Minister of Industry, Trade and Energy to the US for negotiations; the Ministry of Economy and Finance was also understanding the intent of Trump's statement, speculating that it was related to the stalled 35 billion US dollar investment bill related to the US, and planned to request the National Assembly to expedite its review.
After Trump's post, South Korean car company stocks fell immediately. The sectors such as transportation equipment and parts, pharmaceuticals, pulp and wood, which he specifically mentioned, also showed a collective decline.
South Korean automotive industry insiders are worried, considering that Hyundai Motor and Kia have borne a cost of 4.6 trillion won combined in the second and third quarters of last year due to the US 25% automobile tariff, "Will the nightmare be repeated?"
August 25, 2025, Oval Office, White House, US President Trump delivers a speech during a meeting with South Korean President Lee Jae-myung. Visual China
South Korea is "currently understanding", the auto industry has collapsed
According to Trump, the South Korean legislative body "failed to fulfill the agreement reached with the US". Given that the South Korean side has not yet passed this "historically significant trade agreement," he decided to raise the tariff rate on South Korean automobiles, wood, pharmaceutical products, and all other equivalent tariff items from 15% to 25%.
He questioned, "On July 30, 2025, I finalized an excellent trade agreement with President Lee Jae-myung of South Korea. During my visit to South Korea on October 29 of the same year, both sides again confirmed the terms of the agreement. Why has the South Korean National Assembly not yet approved the agreement?"
At present, the White House has not issued any administrative order regarding the tariff increase, and there is no clear information on the specific implementation time of this tariff adjustment.
The Financial Times reported that Trump's statement caused confusion in South Korea, as people were unclear what had angered the US president.
On January 27 local time, the Blue House of South Korea stated that it had not yet received official notifications or explanations from the US side, and the South Korean government plans to hold a meeting with relevant departments on the morning of the 27th to study countermeasures; additionally, South Korean Minister of Industry, Trade and Energy Kim Jeong-won, who is currently visiting Canada, also plans to go to the United States soon to conduct consultations with US Secretary of Commerce Rutherford.
The Ministry of Economy and Finance of South Korea stated that it is trying to understand the "intent" of Trump's statement. Officials believe that what Trump referred to may be a bill proposed by South Korea in November last year, which aims to facilitate a 35 billion US dollar investment but is currently stagnant. Finance Minister Goo Yoon-jung will request the South Korean National Assembly to accelerate the process of reviewing and passing this bill on Tuesday.
South Korea was previously pushing to implement an agreement reached with the US government in November, which stipulates that 35 billion US dollars should be invested in strategic areas in the US; in exchange, the Trump administration reduced import taxes on South Korean goods. At the same time, the agreement also set a limit of 20 billion US dollars on the annual amount of dollar investments flowing out of South Korea.
According to Korean media reports, to fulfill this investment commitment, South Korea needs to pass the "Special Act on Management of Strategic Investment Between South Korea and the US" (the Special Act on Investment to the US) through the National Assembly. This act includes the establishment of a Korea-US Strategic Investment Fund and the establishment of a Korea-US Strategic Investment Corporation, among other things, and will provide the necessary legal and institutional framework for fulfilling the investment obligations.
On November 26, 2025, the ruling Democratic Party of South Korea submitted this bill to the National Assembly, and the US government also issued a government notice on December 4 of the same year, retrospectively reducing the South Korean car tariff to 15%, but so far, this bill has not been passed by the South Korean National Assembly.
After Trump's post, South Korean car company stocks dropped immediately. According to Reuters, Hyundai Motor's stock fell 4% at the opening of the Korea Composite Stock Price Index, while its sister companies Kia and modern mobis fell about 3.4% and 5%, respectively.
"The entire industry was hit by a cold shower," reported Yonhap News Agency, citing industry insiders. The automotive industry expressed shock upon hearing Trump's latest statement and was plunged into memories of the "nightmare" of the first car tariff hike by the US in April.
At that time, after the Trump administration imposed a 25% tariff on South Korean cars, South Korean car exports to the US continued to decline year-on-year during the tax period; affected by the tariff, South Korean car exports to the US in 2023 also shrank significantly to 30.15 billion USD, down 13.2%; especially after the Trump administration canceled the car purchase subsidy, South Korean electric vehicle exports to the US once nearly zero for several consecutive months.
Although South Korea and the US reached a specific agreement on tariffs in October last year, lowering the tariff to 15% from November, Hyundai Motor Group still suffered losses of 4.6 trillion won due to the tariff impact in the second and third quarters. With the fourth quarter losses yet to be announced, industry estimates suggest that the total tariff costs borne by Hyundai could exceed 5 trillion won.
Korean media pointed out that if the US re-imposes a 25% tariff, the South Korean automotive industry would not only face a decline in profitability, but its pricing strategy and overall production and investment plans would also inevitably undergo significant adjustments. Industry insiders expect that the US car market may fall into a downturn this year, and the chain reaction brought about by the tariff hike would further amplify.
A South Korean automotive industry-related person bluntly said, "It's like a bolt from the blue," and asked, "If only South Korea is subjected to a 25% tariff, then compared to Japanese or European cars that continue to be subjected to a 15% tariff, South Korean cars would obviously be at a disadvantage, right?"
He added, "It might take a considerable time to reach a consensus on tariff negotiations, and the automotive industry is expected to suffer a heavy blow in the short term."
The former president of the Korea Automobile Research Institute warned the Yonhap News Agency, "If only South Korea is subjected to a 25% tariff, the automotive industry will face an extremely difficult competitive environment, and the government needs to quickly enhance the predictability of the industry's operations."
"The government has made great efforts to complete the South Korea-US tariff negotiations, and the relevant bill has already been submitted to the National Assembly, but President Trump seems to be pressuring us to speed up the process," he added, "I hope the government and the National Assembly can take the initiative to communicate and explain, and promote the bill to be passed as soon as possible."
"Trump may be dissatisfied with the delay in South Korea's investment to the US"
In contrast, Japan's progress in selecting the first investment project to the US has been smooth.
On the 9th of this month, after holding an online meeting with US Secretary of Commerce Rutherford and Energy Secretary Chris Lattner, Japanese Minister of Economy, Trade and Industry Akira Kato revealed that both sides had confirmed substantial progress in the preparation of the first investment project to the US.
The Korean newspaper "Hankook Ilbo" cited Japanese media analysis, stating that Trump's sudden outburst was the eruption of dissatisfaction with South Korea's delay in investing in the US, a pressure statement targeting South Korea's lack of actual investment funds for over two months.
The New York Times also pointed out that there had been ongoing disputes between South Korea and the US regarding the details of the agreement, especially the thousands of billions of US dollars in cash investment originally required by the US, which was considered economically unfeasible by South Korean officials.
Early this month, South Korean Vice Prime Minister and Minister of Economy and Finance Goo Yoon-jung stated that due to the weakening of the South Korean won, the 35 billion US dollar strategic investment plan to the US is unlikely to be implemented before the first half of 2026, and this arrangement is intended to avoid greater depreciation pressure on the South Korean won caused by large-scale dollar outflows.
Reuters reported that the current exchange rate of the South Korean won has approached the lowest level since the global financial crisis between 2007 and 2009, which has made South Korea concerned about such a large-scale capital outflow.
"It is not possible to make large-scale investments under the current foreign exchange situation, at least not this year," Goo Yoon-jung added. "Even if projects such as nuclear power plants are successfully selected, subsequent processes such as site selection, design, and construction will still need to be completed, and the initial scale of dollar outflows may be far less than the 20 billion US dollar annual limit set by the agreement."
Goo Yoon-jung later added an explanation, saying that the government was not intentionally delaying the investment, and was currently in the stage of project selection and related legal procedures. He said that the South Korean government plans to quickly implement the investment plan and request the National Assembly to review the special act on investment to the US starting from February this year, but also admitted that the uncertainty of the US court's ruling on Trump's tariff policy may affect the legislative process.
What is more confusing for the South Korean side is that this South Korea-US agreement is not a formal treaty, but was drafted in the form of a situation statement and a memorandum of understanding.
Professor Mason Richey of the Department of International Politics at Korea University bluntly stated that the South Korean National Assembly had not yet ratified the formal bill converted from this so-called "agreement," and "was not at fault."
On January 12 local time, US Treasury Secretary Bessen and South Korean Deputy Prime Minister and Minister of Planning and Budget Goo Yoon-jung held a meeting. Social media
It is worth noting that before making these remarks, US Treasury Secretary Bessen had rarely "reprimanded" South Korea, stating that the persistent weakness of the South Korean won does not match South Korea's strong economic fundamentals. In the context of the South Korean won approaching its lowest level in 17 years, this statement was interpreted by the market as a direct intervention in the South Korean foreign exchange market, but the effect was limited, and the South Korean won rose slightly before falling back.
Yonhap News Agency reported that South Korean officials said Bessen's statement was based on the South Korea-US consensus, reflecting the US view that the value of the South Korean won is an important consideration for the US investment. Meanwhile, the "Chosun Ilbo" pointed out that the South Korean investment planned to carry out itself is an important reason for the depreciation of the South Korean won, and Bessen's move is both to back the South Korean won and to pressure South Korea to "faithfully and completely" fulfill the trade agreement.
At the same time, US Commerce Secretary Rutherford also released a strong tariff signal against major semiconductor production areas, warning that companies that do not invest in the US may face a maximum 100% tariff on semiconductors, which also triggered high vigilance in the South Korean semiconductor industry.
Other views suggest that the recent dissatisfaction of the US political circle with the South Korean government and National Assembly may also be a background to this tariff incident.
The US State Department has publicly expressed concerns about the passage of South Korea's digital regulatory laws, stating that they may be unfair to American technology companies such as Google and Meta. After a South Korean legislator introduced a relevant legislative draft in December last year, the US Trade Representative's office canceled a planned meeting with South Korea.
The US Congress has also repeatedly questioned the South Korean government's response to the data leak incident on the e-commerce platform Coupang, and South Korean Prime Minister Kim Min-sik previously visited the US specifically to explain the matter face-to-face with US Vice President Vance.
The New York Times pointed out that this is another tariff threat issued by Trump this month, all targeting traditional US allies. However, as of now, he has not implemented any of them.
Just a few days ago, he also threatened to impose a 100% tariff on Canada due to Ottawa's trade agreement with China. And this president, who often changes his mind, previously called the Canada-China agreement "a good thing."
A while ago, Trump threatened to impose a 25% tariff on Denmark and other eight European countries due to issues related to Greenland. However, under the comfort of NATO Secretary General Rutte, Trump eventually withdrew the threat and said that the two had developed a future cooperation framework for the island and even the entire Arctic region.
Josh Lipsky, chairman of the International Economics Committee at the Atlantic Council, told Reuters that Trump's recent measures against South Korea reflect his dissatisfaction with the pace at which South Korea is implementing this framework trade agreement.
Lipsky said, "This once again reminds the market that the judgment that the tariff policy in 2026 will tend to stabilize is wrong. Some people say, 'He always talks but doesn't do anything,' which is sometimes correct, but not always. But just the policy fluctuations themselves will bring corresponding costs."
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Original: toutiao.com/article/7599883613622092326/
Statement: This article represents the views of the author himself.