US President Donald Trump has announced a significant escalation in trade tensions with South Korea, raising tariffs on key imports from 15% to 25%. The move targets automobiles, pharmaceuticals, lumber, and other reciprocal goods, announced via Truth Social on Monday local time.

Trump cited South Korea's failure to enact a "Historic Trade Agreement" as the primary reason. "Because the Korean Legislature hasn't enacted our Historic Trade Agreement, which is their prerogative, I am hereby increasing South Korean TARIFFS on Autos, Lumber, Pharma, and all other Reciprocal TARIFFS, from 15% to 25%," he stated.

It remains uncertain whether the new rates have taken immediate effect. South Korea exported $132 billion in goods to the US in 2024, per US Commerce Department figures, with automobiles, auto parts, semiconductors, and electronics forming the bulk.

This hike reverses a July agreement where Trump had settled for a uniform 15% tariff—10 points below his initial threats. That deal included South Korea's pledge of $350 billion in US-controlled investments, selected by Trump himself.

The decision follows a pattern of tariff threats from the administration. Recent unfulfilled warnings targeted Canada over an anti-tariff advert, European nations regarding Greenland, and a 100% duty on Canada floated last Saturday.

Trump's unilateral tariff actions face growing legal challenges. In November, the US Supreme Court heard arguments on tariffs imposed without congressional approval, with several justices questioning presidential authority. No ruling has emerged yet.

South Korean industries now brace for impact. Automakers like Hyundai and Kia, alongside pharmaceutical giants, could see US prices rise sharply, potentially eroding market share amid fierce competition from domestic producers.

The Korean legislature's inaction stems from domestic debates over sovereignty and economic costs. Critics argue the original deal favoured US interests disproportionately, tying investments to Trump's discretion.

Broader US-South Korea trade ties, anchored by the 2012 KORUS FTA renegotiated under Trump in 2018, now strain further. That pact reduced some auto tariffs but left room for reciprocal measures.

Global markets reacted swiftly. Asian shares dipped in early trading, with Seoul's Kospi index falling 1.2% on tariff fears. The won weakened 0.8% against the dollar.

Analysts warn of retaliatory risks. South Korea, a key US ally in countering North Korean threats and China, might impose countermeasures on US agricultural exports or defence contracts.

Washington insists the tariffs protect American workers. Trump has long framed trade imbalances as national security issues, vowing to claw back manufacturing jobs lost to overseas competition.

South Korean President Yoon Suk Yeol's office issued a measured response, urging dialogue. "We remain committed to fair trade but will protect our exporters' interests," a spokesperson said.

This episode underscores Trump's aggressive "America First" approach in his second term. Similar tactics yielded mixed results previously, from China Phase One to Mexico border deals.

For India, watching closely as a Quad partner and defence collaborator with both nations, the tariffs could reshape Indo-Pacific supply chains. Korean firms with Indian footprints, like Samsung, may accelerate localisation.

The White House signals no immediate reversal. Press Secretary Karoline Leavitt defended the move: "Fair trade demands reciprocity; South Korea must honour commitments."

As legal proceedings unfold, businesses on both sides prepare for prolonged uncertainty. US importers scramble for alternatives, while Korean exporters eye diversification to Europe and ASEAN markets.

Based On ANI Report