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US President Donald Trump on Monday said that he would hike tariffs on South Korean autos and other imports, blaming a delay in enacting the pact agreed last year.
Trump said that South Korea's parliament was not living up to its side of the deal by swiftly enacting the agreement he reached with President Lee Jae Myung to make huge investments in US business projects in return for tariff cuts.
For South Korea, the decision, which officials in Seoul said caught them by surprise, is the latest setback as it tries to navigate the alliance and trade partnership amid potential challenges to its security and financial stability posed by Trump's demands, reports Reuters.
Trump and Lee struck a deal in principle last July for Seoul to make $350 billion of investments in the US, despite concerns over the impact of such a large outflow from Asia's fourth-largest economy.
"President Lee and I reached a Great Deal for both Countries on July 30, 2025 and we reaffirmed these terms while I was in Korea on October 29, 2025," Trump wrote on social media.
Trump said South Korea's legislature had not enacted the deal and as a result: "I am hereby increasing South Korean TARIFFS on Autos, Lumber, Pharma, and all other Reciprocal TARIFFS, from 15 per cent to 25 per cent."
It was not immediately clear when the hike would take effect.
A source familiar with internal discussions between the countries said Trump may have been prompted by recent South Korean regulatory actions against Coupang, a US-listed e-commerce company that has protested them as unfair and discriminatory.
The countries have been in talks to address Washington's concerns about regulations on US tech firms as part of the trade deal.
South Korea's presidential Blue House said it was committed to implementing the deal and would continue to take the required steps to finalise it to stave off tariff hikes.