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Donald Trump has said he will increase tariffs on South Korea to 25 per cent in response to Seoul’s slow pace in enacting the trade deal it struck with the US last year.
In a post on Truth Social on Monday, the US president said the increase would apply to all goods covered by his “reciprocal” tariffs, along with cars, lumber and pharmaceutical goods.
“Our Trade Deals are very important to America,” Trump wrote. “In each of these Deals, we have acted swiftly to reduce our TARIFFS in line with the Transaction agreed to. We, of course, expect our Trading Partners to do the same.”
He added: “South Korea’s Legislature is not living up to its Deal with the United States.”
The office of South Korea’s President Lee Jae Myung said in a statement that “there has been no official notification or explanation of the details from the US government”.
Shares in Korean carmakers Hyundai Motor and Kia opened lower on Tuesday but quickly pared losses to be down 0.2 per cent and 2.1 per cent respectively amid a broader market rally. The Korean currency weakened from Won1,442 per dollar to Won1,450.
Trump’s abrupt ratcheting up of duties on a trading partner upends the deal struck between Washington and Seoul late last year, and will rattle other countries with similar agreements.
The president announced last summer he would slash many tariffs on South Korea to 15 per cent, in exchange for Seoul’s pledge to invest $350bn in the US.
The deal included relief for South Korean automotive companies, with tariffs on cars and car parts cut to 15 per cent, in line with Trump’s levies on Japan and the EU. The agreement was sealed late last year after Trump visited South Korea.
Trump’s announcement caused confusion in South Korea over what had provoked the US president.
The country’s economy and finance ministry said it was trying to understand “the intent” of Trump’s statement. Officials believe Trump may have been referring to a bill proposed in November that would enable the $350bn investment, but which is currently stalled.
Finance minister Koo Yun-cheol will on Tuesday ask the National Assembly to speed passage of the bill, the ministry said in a statement.
Adding to the uncertainty is the fact that the trade deal was contained in a factsheet and a memorandum of understanding, rather than a formal treaty.
“I don’t blame the South Korean National Assembly for not ratifying a transposed version of the flimsy factsheet tariff ‘deal’,” said Mason Richey, professor of international politics at Hankuk University of Foreign Studies.
Although this is the first time Trump has reversed course on a deal to lower his “reciprocal” tariffs, his officials have previously complained that other countries were not implementing agreements quickly enough. In November, one official accused the EU of “being kind of slow”.
The tariff announcement followed a tumultuous week in which Trump warned he would impose steep levies on European countries, before backing down.
Late last week, the European parliament said it would delay any further measures to put the trade deal with Washington in place until Trump dropped his threats to impose tariffs over his bid for control of Greenland.
Trump cannot impose tariffs by announcing them on Truth Social and will need to enact the levies using a presidential authority, such as an executive order, before they apply.
Many of the tariffs he has imposed over the past year have been subject to court challenges and could be ruled illegal by the US Supreme Court.