US President Donald Trump said he was hiking tariffs on goods imported from South Korea to 25 per cent, citing Seoul’s failure to legislate a trade deal agreed last year that capped US levies on the items at 15 per cent.

It was not immediately clear what prompted Trump’s outburst on the social media platform Truth Social on Monday, but South Korea has faced delays implementing the deal, and there has also been tension over the perceived mistreatment of US technology firms.

What is holding up South Korea from implementing the trade deal?

Under the deal that Trump and President Lee Jae Myung agreed on when the US leader visited South Korea in October 2025, Seoul pledged $350 billion of investments into strategic US industries in return for tariffs being capped at 15 per cent.

South Korean Finance Minister Koo Yun-cheol told Reuters this month, however, that “it is unlikely” the investment could begin in the first half of this year, citing administrative reasons and currency market volatility.

Any investment decisions will need to follow a multi-layered governance structure involving the project management committee, orchestrated by South Korea’s trade and finance ministers, who will then evaluate commercial viability and legal alignment.

Why is foreign exchange such a concern for South Korea?

The won’s near 7 per cent decline against the dollar over the past six months has been a major source of concern for the country’s financial authorities, prompting them to verbally support the South Korean currency several times as it approaches levels not seen since the global financial crisis.

Authorities are worried that the planned $350 billion outflow of funds to the US could further weaken the won. In his interview with Reuters on January 16, 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 also said this month he would not agree to any investment outflows to the US if currency markets became unstable.

What has been the South Korean Parliament’s role?

For the US trade deal, the South Korean government plans to establish a fund to raise foreign currency without destabilising the onshore dollar-won market. This step requires a special law enacted by the National Assembly.

Debate had initially swirled over the need for parliamentary approval, with some officials arguing it was unnecessary since the memorandum of understanding with the United States was non-binding.

Some South Korean lawmakers demanded the bill be pushed through a fast-track process, a mechanism that allows bills to be voted on quickly, but given the scale of the investment involved, the idea was opposed by many.

On November 26, the ruling Democratic Party submitted a bill to establish a policy investment vehicle and to define the fund’s governance and operating rules, but the bill has been sitting at the parliament’s standing committee for two months due to disagreements among lawmakers.

Although President Lee’s Democratic Party holds the majority in the 300-member parliament, the bill must pass through the finance committee, which the opposition People’s Power Party currently chairs.

On Tuesday, the finance ministry said it planned to ask parliament for cooperation, and the ruling party said it was ready to work with the opposition to speed up the bill’s passage.

Japan and South Korea had both agreed on separate but somewhat similar trade framework deals with Washington last July, but Tokyo has implemented the agreement more quickly.

Japan’s parliament approved its US trade pact on December 3 and held the first panel consultation on December 23 to kick-start Tokyo’s planned $550 billion in US investment.

What other trade frictions are there between the US and South Korea?

A source familiar with the internal US-South Korea discussions cited the perceived mistreatment of US tech companies as a trigger point.

A major data breach late last year at Coupang, a US-listed e-commerce company operating in South Korea, has escalated into a dispute that now threatens to hurt broader trade relations between the countries.

Coupang, South Korea’s largest online retailer, alleges that the country’s regulators singled out the company through public criticism and raids, wiping out its market value and causing a loss for US investors.

South Korean Prime Minister Kim Min-Seok used his meeting with US Vice President JD Vance in Washington last week to deny allegations of discriminatory treatment of the company.

Vance requested that the two governments manage the issue effectively to avoid misunderstandings and escalation, Kim said after the meeting.

Reporting by Cynthia Kim and Jihoon Lee in Seoul and Steve Holland in Washington. Editing by Ed Davies and Jamie Freed. All courtesy of Reuters.

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