Trump’s tariff threats leave Korea awash in speculation, short on answers

Home > Business > Industry

Trump’s tariff threats leave Korea awash in speculation, short on answers

Published: 27 Jan. 2026, 17:51 Updated: 27 Jan. 2026, 20:07

LEE JAE-LIM
[email protected]

PARK EUN-JEE
[email protected]

CHO YONG-JUN
[email protected]

Audio report: written by reporters, read by AI

President Lee Jae Myung, right, shakes hands with U.S. President Donald Trump after presenting him with the Grand Order of Mugunghwa and a model of the Cheonmachong gold crown at the Gyeongju National Museum in Gyeongju, North Gyeongsang on Oct. 29, 2025. [JOONGANG ILBO]

U.S. President Donald Trump’s threat to hike auto tariffs on Korea to 25 percent blindsided the Korean government, prompting swift legislative efforts related to the trade pact as officials try to gauge Washington’s true intentions.

Trump, who signed a trade pact in October hinging on Korea investing $350 billion in exchange for lowering auto tariffs to 15 percent, pointed to the delayed passage of a related bill pending in the National Assembly’s Strategy and Finance Committee.

"Because the Korean Legislature hasn't enacted our Historic Trade Agreement, which is their prerogative, I am hereby increasing South Korean TARIFFS on Autos, Lumber, Pharma, and all other Reciprocal TARIFFS, from 15% to 25%," Trump wrote on Truth Social.

U.S. President Donald Trump's post on Truth Social

Still, experts and industry insiders see that Trump's remarks aim to give the United States the upper hand on a range of thorny issues, including proposed revisions to digital regulations and the ongoing investigation into Coupang.

Industry Minister Kim Jung-kwan, who is currently in Canada, and Trade Minister Yeo Han-koo plan to visit the United States as soon as possible to discuss the issue with U.S. Secretary of Commerce Howard Lutnick.

Legislation in question

The trade bill, dubbed the Special Act on Investment in the United States, outlines legal mechanisms for implementing U.S.-bound investments, including the creation of a Korea-U.S. strategic investment fund.

It was submitted on Nov. 26 last year but has been in limbo since the ruling Democratic Party and the opposition People Power Party clashed over whether the bill should require ratification or be treated as a special act that does not require ratification.

“A meeting between the Deputy Prime Minister and Finance Minister Koo Yun-cheol and the head of the Strategy and Finance Committee had been scheduled for this afternoon, during which the government intended to request parliamentary cooperation on the special legislation,” said the Finance Ministry in a statement on Tuesday.

However, the committee's head indicated that the discord persists.

“The People Power Party (PPP) has consistently made clear its position that the overall fiscal burden, industrial hollowing-out and employment impact must be thoroughly reviewed,” said Rep. Lim Lee-ja, chair of the committee and a member of the PPP. “But amid the Democratic Party’s insistence on pushing ahead with the special bill while sidestepping a validation process, discussions in the National Assembly have effectively ground to a halt, and the government has also failed to present a concrete implementation plan,” Lim said.

Others see the U.S. president's remarks as pressure on Korea to expedite investment in the United States after Finance Minister Koo and other senior officials suggested that investments could be delayed past the first half of this year.

A complaint letter, or a prelude?
It was learned later on Tuesday that about two weeks before Trump's tariff threat, the U.S. embassy in Seoul had sent a letter to the Korean government, raising concerns that the country's push to implement digital regulations could, in the U.S. government's view, harm American companies operating in Korea.

"The letter primarily concerns Korea's digital-related issues," the Ministry of Industry, Trade and Resources confirmed on Tuesday, emphasizing that the content did not have a "direct connection" to the bilateral $200 billion investment deal that the two countries signed in November last year, as outlined in a joint fact sheet.

Yeo Han-koo, right, Korea’s chief trade negotiator at the Ministry of Trade, Industry and Resources, poses for a photo with U.S. Rep. Darrell Issa during their meeting in Washington, D.C., on Jan. 12. [MINISTRY OF TRADE, INDUSTRY AND RESOURCES]

While it remains unclear whether the letter served as a prelude to President Trump’s reversal from the previously agreed 15 percent auto tariff, experts suspect that Korea’s digital regulations, cited in the diplomatic note, may have fueled his discontent.

The letter, sent in the name of James Heller, chargé d’affaires at the U.S. Embassy in Seoul, was delivered to Minister of Science and ICT Bae Kyung-hoon on Jan. 13. Officials said it also listed Industry, Trade and Resources Minister Kim Jung-kwan, Foreign Minister Cho Hyun, and trade regulator Chairman Ju Biung-ghi as recipients copied on the correspondence.

Such public opposition by a foreign government to a country’s domestic legislative process on digital regulation is rare. The United States has openly objected to two pieces of Korean legislation in particular: revisions to the Information and Communications Network Act and a bill aimed at regulating online platforms. The former — often referred to as the Network Act — seeks to curb the spread of fake news that has intensified alongside advances in AI, allowing courts to impose punitive damages for the intentional dissemination of false or manipulated content on major platforms.

The U.S. Congress, the Office of the U.S. Trade Representative (USTR), and the U.S. Chamber of Commerce have all pushed back against the measure, arguing that it discriminates against U.S.-based platforms while giving Chinese competitors an advantage.

Progress on the bill has been slow, and it remains a proposal without a fixed effective date.

The online platform law, pledged during President Lee Jae Myung’s campaign, aims to curb abuses of market dominance by global platform operators through stricter regulations, including limits on commission fees and bans on unfair practices.

The U.S. State Department has also criticized the Network Act, scheduled to take effect in July, saying it infringes on freedom of expression.

Trade experts say the likelihood that these laws directly influenced tariff decisions is low, though they do not rule out the possibility that they played an indirect role in shaping Washington’s stance.

“There is clearly room for misunderstanding that Korea is discriminating against the United States or attempting to exclude U.S. interests more broadly,” said a trade policy researcher who requested anonymity. “It can also be inferred that, among the various channels reporting to President Trump, there is a group conveying negative assessments of Korea.”

Oh Hyun-suk, a professor of international commerce at Keimyung University, said the effects of such nontariff barriers are likely limited and may instead be part of the Trump administration’s broader negotiating strategy.

“There were discussions about delaying this year’s planned $20 billion investment allocation to the United States due to foreign exchange and currency issues,” Oh said. “But rather than allowing a delay, the Trump administration may be pressuring Korea to move ahead quickly without postponement. Digital regulations are unlikely to have played a decisive role in tariff decisions, given that they have not been publicly raised during trade negotiations.”

Coupang conundrum

Harold Rogers, interim CEO of Coupang Korea, answers lawmakers’ questions at a joint parliamentary hearing on a Coupang security breach, personal data leak, unfair trade practices and labor conditions at the National Assembly in Yeouido, Seoul, on Dec. 30. [NEWS1]

The ongoing Coupang investigation and allegations that the Korean government has mistreated the Seattle-based e-commerce platform may also have played a role in President Trump’s move, according to experts and lawmakers.

“It would be politically burdensome for the United States to defend a company that has violated Korean laws,” said Professor Kim Tae-hwang from Myongji University’s Department of International Business & Trade, mentioning that Coupang’s lobbying efforts would have reached the U.S. Congress and the White House.

“So, the United States might be using alleged non-compliance with digital service agreements as a formal pretext to exert pressure on how the Coupang case is handled.”

Following the announcement of Coupang’s massive data breach that allegedly affected 33.7 million customers in November 2025, the government’s investigation of the e-commerce platform grew larger, with an interdepartmental task force comprising the science and labor ministries, media watchdog and financial authorities launching in December. Coupang is accused of systematically hiding the leak and undermining the Korean government's inquiry into the incident.

This had not only resulted in Coupang’s major U.S. investors, Greenoaks Capital and Altimeter Capital, petitioning the USTR and filing a notice of intent to initiate an investor-state dispute settlement, but also drew U.S. lawmakers into the fray.

Republican lawmakers Rep. Darrel Issa and Rep. Scott Fitzgerald have publicly expressed concerns about the issue.

“There are consequences for state-sponsored hostile actions toward American companies and American citizens,” Rep. Issa said on X on Jan. 13, saying that the actions of the Korean government are “a politically motivated witch hunt.”

PPP lawmaker Yoon Sang-hyun, citing the comment, said President Trump’s move Monday reflects such sentiment.

“There have been criticisms in Washington that the Korean government is going on a ‘witch-hunt’ against Coupang,” PPP lawmaker Yoon said, alleging that the government’s treatment of Coupang escalated the situation.

PPP lawmaker Park, citing how U.S. Vice President J.D Vance mentioned the arrest of Pastor Son Hyeon-bo and Coupang during his meeting with Prime Minister Kim Min-seok, said President Trump’s move reflects his “distrust” of President Lee.

“The Korean government must maintain a firm and resolute stance that this legal case [against Coupang] and broader trade issues are entirely separate,” Professor Kim said.