US President Trump announced an increase in tariffs on South Korean goods—including cars, timber, and pharmaceuticals—from 15% to 25%. The stated reason is the failure of South Korea’s legislature to ratify a trade agreement reached with the US in 2025.
Impact Analysis
So much for the narrative that Trump would lower tariffs to fight inflation.JIN10+ 2 This move is classic Trump—unpredictable and transactional. The justification about the 2025 trade deal not being ratified is just the pretext. The real signal is that the trade war playbook is far from over, and he’s prioritizing leverage over stable policy. The immediate impact is a direct margin hit for Korean automakers and pharma exporters. But the second-order effect is more important: a repricing of geopolitical risk across the board. The market was getting complacent, and this is a wake-up call. It reinforces the theme of global trade fragmentation. The most direct trade is to be short Korean equities, specifically the auto sector, which is now facing a significant, unexpected headwind. This also adds to general market volatility.