U.S. President Donald Trump said on social media that he would hike tariffs on autos and other imports from South Korea to 25%, arguing that Seoul has not passed the laws needed to implement a trade agreement that limits U.S. levies on those products to 15%.
It was not immediately clear what specifically prompted Mr. Trump’s post on Truth Social, but South Korea has encountered delays in putting the accord into effect. The relationship has also seen friction over allegations that South Korean authorities have treated U.S. technology companies unfairly.
Terms of the trade-for-investment deal
Under the agreement reached during Mr. Trump’s state visit to South Korea in October 2025, Seoul committed to directing $350 billion of investments into strategic U.S. industries. In return, the United States agreed to cap tariffs on autos and other specified goods from South Korea at 15%.
South Korean Finance Minister Koo Yun-cheol told Reuters this month that "it is unlikely" the investment program could begin in the first half of the year, attributing the delay to administrative hurdles and volatility in currency markets. The investment initiative requires a multi-layered governance process, with a project management committee steered by South Korea’s trade and finance ministers. That committee is expected to assess the commercial viability and legal conformity of proposed investments before they move forward.
Currency-market pressures
A key constraint cited by South Korean officials is the won’s recent weakness. The currency has fallen nearly 7% against the dollar over the past six months, raising concern among policymakers. Authorities have made verbal interventions in an effort to support the won as it neared levels not seen since the global financial crisis.
Officials fear that an outflow of funds on the scale of $350 billion to the United States could further depress the won. In his January 16 interview with Reuters, Finance Minister Koo said "not a lot (of investment) can be made under the current forex situation, at least for this year." Bank of Korea Governor Rhee Chang-yong added this month that he would not consent to any investment outflows to the U.S. if currency markets became unstable.
The parliamentary hurdle
To carry out the investment plan without destabilising the onshore dollar-won market, the South Korean government intends to create a fund to raise foreign currency. Establishing that fund requires a special law to be passed by the National Assembly.
Initial debate inside Seoul questioned whether parliamentary approval was necessary, with some officials arguing the memorandum of understanding with Washington was non-binding. Other lawmakers insisted on legislative oversight. Some members sought a fast-track procedure to accelerate the bill, but given the magnitude of the investment, many opposed rushing the legislation.
On November 26, the ruling Democratic Party put forward a bill to set up a policy investment vehicle and to spell out the fund’s governance and operating rules. The legislation, however, has languished in the parliament’s standing committee for two months amid disagreements among lawmakers.
Although President Lee’s Democratic Party commands a majority in the 300-seat National Assembly, the bill must clear the finance committee, which is chaired by the opposition People’s Power Party. On Tuesday, the finance ministry said it would seek parliament’s cooperation, and the ruling party indicated it was prepared to work with the opposition to accelerate the bill’s passage.
How Japan handled its comparable pact
Japan and South Korea reached separate but broadly similar trade framework deals with Washington last July. Tokyo moved more quickly to put its pact into law. Japan’s parliament approved its U.S. trade agreement on December 3 and held a first panel consultation to discuss the inaugural project on December 23 to initiate a planned $550 billion of Japanese investment into the United States.
Other sources of bilateral friction
A person familiar with private discussions between U.S. and South Korean officials said concerns over the treatment of U.S. technology firms has been another flash point in bilateral relations. A major data breach late last year at Coupang, the U.S.-listed e-commerce company operating in South Korea, has become a particular source of dispute.
Coupang says South Korean regulators singled the company out for public criticism and raids, a series of actions that have wiped out market value and hurt U.S. investors. South Korean Prime Minister Kim Min-Seok used a meeting with U.S. Vice President JD Vance in Washington last week to deny charges of discriminatory treatment. After the meeting, Kim said Vance asked that the issue be managed carefully by both governments to avoid misunderstanding and escalation.
Implications and immediate outlook
The combination of delayed legislation, a fragile foreign-exchange backdrop and tensions over corporate regulatory actions have left the implementation of the U.S.-South Korea trade-investment deal in doubt. U.S. tariff policy appears to be linked directly to legislative progress in Seoul and to assessments of whether South Korea can move forward with the pledged investments without undermining domestic currency stability. In the absence of quick parliamentary action and clearer currency-market conditions, the timetable for the planned $350 billion of investment remains uncertain.