U.S. President Donald Trump on the 26th (local time) declared that he would raise tariffs on Korean automobiles, pharmaceuticals and lumber, among others, to 25% from the current 15%, saying Korea's National Assembly is not ratifying the U.S.-Korea trade agreement. The hard-line step lifts the currently applied 15% tariff rate by 10 percentage points in one stroke, to the same level as the ceiling discussed before trade agreement talks last year.
Trump said on his social media platform Truth Social that "the United States quickly lowered tariffs in line with the agreement, but Korea's National Assembly is not implementing it." However, contrary to the announcement, there has been no official notice or executive order at the administration level yet. The specific timing of implementation and the scope of application have also not been clearly presented. For this reason, some interpret the move less as an "immediate effect" than as a political signal aimed at pressuring the Korean side to respond.
The "trade agreement" Trump mentioned refers to the U.S.-Korea trade framework reached with President Lee Jae-myung on July 30 last year and reaffirmed during the Oct. 29 visit to Korea that same year. Under the agreement, Korea pledged $350 billion (about 460 trillion won) in investment in the United States. In return, the United States agreed to set the tariff cap applied to Korean products at 15%.
Because the U.S.-Korea trade framework was structured as a combination of political declaration and implementation commitments, differences in perception over it translated into a temperature gap between the two countries in the actual execution process. The Korean government submitted related bills to the National Assembly in November last year based on a fact sheet summarizing the agreement. The bill was introduced on Nov. 26. At the time, the Trump administration was said to have conveyed that it would move to cut tariffs as long as the item was formally placed on the Assembly's agenda. In fact, on Dec. 4 last year the U.S. government announced in the Federal Register a measure lowering tariffs on Korean automobiles to 15%. The reduction was applied retroactively.
Since then, however, the Special Act on Investment in the United States submitted to the National Assembly has yet to clear the threshold of a plenary session. The bill is currently pending with the Strategy and Finance Committee. Differences in interpretation between the ruling and opposition parties also emerged during the process. Some within the Democratic Party of Korea questioned whether the investment consultations with the United States, which they argued were in the nature of a memorandum of understanding (MOU) rather than a legally binding treaty, should go through parliamentary ratification like the Korea-U.S. Free Trade Agreement (FTA). The People Power Party, by contrast, was said to hold that the content of the agreement as a whole needed to be reviewed at the parliamentary level through a ratification process.
Trump also took issue not with "violating the agreement" but with "not implementing it." There is currently no formal, signed trade agreement document between Korea and the United States. The same is true for Japan and the European Union (EU). Even so, the reason Trump's tariff pressure has focused on Korea is that the "trade agreement implementation rate" he refers to is not a legal concept but the political and visible speed of execution.
According to the Peterson Institute for International Economics (PIIE), the only real case in which the United States specifically calculated an "implementation rate" and made an issue of it was the 2020 U.S.-China Phase One deal. China pledged to purchase additional U.S. goods over two years, but the actual amount bought in 2020 reached only 58% of the target. The first Trump administration and the subsequent Biden administration used this specific implementation rate as grounds to maintain tariffs on China and apply additional pressure.
By contrast, the trade agreements with Korea, Japan and the EU are strongly in the nature of a "framework" that does not specify concrete purchase targets. The fact sheets they concluded with the United States do not have the legal force of a treaty or agreement. They are closer to written "political commitments." The Trump administration, recognizing this, is focusing on execution signals rather than implementation rates. At this point, Japan and the EU showed distinctly different moves from Korea.
Japan likewise does not have a formal, signed trade agreement document with the United States. But Japan, through an executive order personally signed by President Trump, elevated the tariff cuts on Japanese automobiles to a state where they could actually be executed. In addition, policy finance institutions led by the Japan Bank for International Cooperation (JBIC) moved early to activate support structures for investment in the United States. It has already mobilized budgetary and financial tools to begin implementing the framework.
The EU also has no signed trade agreement, but at the European Commission level it formalized the framework in official documents and launched a political response. Following the agreement, the EU codified in official briefings and documents its plan to purchase $750 billion in U.S. energy. At the same time, it publicly mentioned counteroptions such as retaliatory tariffs and the Anti-Coercion Instrument. Although Trump-side trade officials publicly criticized the EU's moves as "slow," experts said immediate tariff hikes were not pushed through in light of the opportunity costs of the counteroptions.
Korea's conditions were different. It neither took administrative steps showing tariff execution like Japan nor reached the stage of parallel official documentation and retaliation cards like the EU. With parliamentary ratification still pending, the $350 billion investment package proposed for the United States has yet to see a visible timeline for execution.
Another factor that made Korea a "example" is that the effect of tariff hikes would be felt immediately. Korea's exports to the United States totaled $131.6 billion (about 191 trillion won) last year. Certain industries, especially automobiles, rely heavily on the U.S. market. In the industry, Hyundai Motor Group's U.S. sales and shipments are considered to be around 1 million units a year, indicating a high dependence on the United States. Even by Hyundai Motor alone, of 4.14 million vehicles sold globally in 2024, U.S. sales reached 740,000 (about 18%). Given this, the side effects of tariff hikes could quickly spread across not only corporations' profitability but also prices and employment more broadly.
The Korean government and business community did not hide their dismay. As they waited for parliamentary ratification and coordinated investment plans, corporations now have to consider the unexpected scenario of a "25% tariff." Jake Colvin, president of the National Foreign Trade Council (NFTC), said in an interview that the Trump administration is "reshaping the global playing field" through tariffs. Fox Business also cited experts as saying the Trump administration is using tariffs not as a bargaining chip, but as leverage to force agreement implementation.