Trump Threatens 25% Tariffs on South Korea, Reigniting Trade War Fears

President Donald Trump escalated global trade tensions on Sunday, issuing a direct ultimatum to South Korea via social media. The President announced plans to raise tariffs on South Korean imports—including automobiles, timber, and pharmaceuticals—from 15% to 25%, citing Seoul's failure to ratify a trade agreement reached in mid-2025.

Policy Escalation

In a post on Truth Social, Trump criticized the South Korean National Assembly for failing to implement the bilateral agreement reportedly secured on July 30, 2025. The administration views this inaction as a breach of terms confirmed during the President's visit to Seoul last October.

The threatened tariff hike represents a significant pivot toward protectionism, targeting South Korea's critical export sectors. For currency markets, this development poses an immediate downside risk to the South Korean Won (KRW) and could trigger contagion effects across broader Asian currencies, particularly the Australian Dollar (AUD), which often acts as a liquid proxy for regional trade sentiment.

Key Data Snapshot

• New Tariff Rate: 25% (increased from 15%)
• Affected Assets: KRW, AUD, USD
• Critical Date: July 30, 2025 (Agreement Breach)

Market Implications

Strategists warn that a rekindled trade dispute between Washington and key Asian allies could strengthen the US Dollar (USD) via the safe-haven channel. “If confirmed, a 10 percentage point hike on Korean autos is a structural shock to the export-oriented economy,” analysts note. Markets will be closely watching for Seoul's official response and any signs of retaliatory measures that could further fracture global supply chains.