Trump Plans Sharp Tariff Hikes on Korean Goods; Seoul Counters with $350B U.S. Investment Push

On January 26, Trump announced plans to raise tariffs on South Korean products—including automobiles, timber, and pharmaceuticals—from 15% to 25%, citing the South Korean National Assembly’s failure to ratify a trade agreement reached last year. This move is widely seen as pressure on Seoul to implement the U.S.-South Korea Special Act on Strategic Investment, aimed at driving South Korean investment into key U.S. strategic industries. South Korea responded swiftly: its finance minister urgently coordinated with the National Assembly to advance the legislation and prepared for high-level talks in Washington. Given that the U.S. is South Korea’s second-largest export market, Seoul finds itself in a reactive position. The bill currently faces significant hurdles due to partisan divisions in the legislature, while concerns mount over potential capital outflows destabilizing the foreign exchange market. Industries are taking proactive measures: automakers, bearing the brunt of the pressure, may accelerate plans to build U.S. factories—raising fears of domestic industrial hollowing-out; pharmaceutical firms are mitigating risks through localization strategies; and although the semiconductor sector faces pressure, practical implementation of higher tariffs remains challenging. A short-term compromise between Seoul and Washington appears likely, but the long-term industrial repercussions will be hard to reverse, potentially reshaping competitive dynamics across the Asia-Pacific region.