- President Trump threatened late Monday to raise tariffs on South Korean cars from 15% to 25% because he says the country isn’t living up to an agreement made last summer.
- For now, it’s just a social media post, not an actual policy change.
The U.S. may return to a 25% tariff on cars imported from South Korea just six months after an agreement set levies to 15%. President Trump threatened the move in a social media post late yesterday.
The move would raise prices on many cars, including some built by American companies. Automakers have raised prices in response to tariffs, but by far less than the tariff figure would suggest.
So far, Trump’s announcement has not resulted in any formal policy change. But making his pronouncements official often takes time.
Tariff Policy Has Been a Roller Coaster
- Trump began enacting heavy tariffs early in his second term, setting the automotive world spinning.
- Policy seemed to settle down over the summer, but that may have been a pause, not an end.
Tariffs were a pillar of Trump’s campaign, and new tariff announcements were a regular feature of his first months in office.
He set a 25% levy on most imported cars, including those made in South Korea. That move impacted South Korean automakers Hyundai, Kia, and Genesis (all part of the Hyundai Motor Group).
But it also increased costs for domestic automakers, as they often build their least-expensive models in South Korea. Buick builds its Envista and Encore GX there. Chevrolet does the same with its Trax and Trailblazer.
The U.S. and South Korea later negotiated a long-term deal setting the rate at 15% instead of 25%.
Trump is concerned that South Korea is not executing parts of that deal. Trump, The New York Times explains, “agreed to lower tariffs on South Korean products to 15% after winning a pledge that Seoul would invest $350 billion in the United States.”
Now, he has “remarked that South Korea’s National Assembly was taking too long to implement the investment deal.”
South Korean officials say the National Assembly does not need to act “because the two governments had signed a memorandum of understanding, not a treaty.”
Automotive News reports that the country’s ruling Democratic Party now says it will start deliberating a bill to make the investments next month.
Everyone’s Waiting on the Supreme Court
- The Supreme Court recently heard arguments on whether Trump ever had the authority to enact the tariffs in the first place, but has not yet ruled on the matter.
CNBC notes, “The U.S. Supreme Court in November heard arguments in a case challenging the legality of Trump’s unilaterally imposed tariffs, with justices expressing skepticism that he had the power to levy such duties without authorization of Congress.”
The court has not released its ruling. Rulings could come at any time until early July.
White House officials have said Trump has other options for enacting tariffs if the court rejects the current strategy.
