South Korean financial markets tumbled on Monday (July 7) after US President Donald Trump announced a surprise 25% tariff on South Korean goods, deepening trade tensions with a long-time ally and triggering broad risk-off sentiment across emerging markets.
Won hits two-week low
The South Korean won sank as much as 1.1% to 1,378 per dollar — its weakest level in two weeks — immediately after Trump posted the tariff announcement on social media.
Trump slaps 25% tariff on South Korean imports starting August 1
US President Donald Trump announced on Monday (July 7) that his administration will impose a 25 percent tariff on all imports from South Korea, citing long-standing trade imbalances and what he described as unfair tariff and non-tariff barriers. The tariffs are set to take effect from August 1, 2025.
In a letter to South Korean President Lee Jae-myung, Trump said the United States had shown “great commitment” by continuing trade relations with both countries despite “significant” deficits.
“We have decided to move forward with you, but only with more balanced, and fair, TRADE,” Trump wrote in the letter released by the White House.
Trump made it clear that if South Korea responds by raising its own tariffs on US goods, the US would increase its new 25% levy proportionally.
“If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 25% that we charge,” he warned.
Trump emphasised that the persistent trade deficit with South Korea was “a major threat to our Economy and, indeed, our National Security.”
He criticised “Tariff and Non Tariff Policies and Trade Barriers”, arguing they have resulted in “unsustainable trade deficits” for the US.
The president offered a path for South Korean companies to avoid the tariffs: move manufacturing to the United States.
“There will be no Tariff if [you] decide to build or manufacture product within the United States,” Trump wrote. He promised expedited approvals, “in a matter of weeks.”
