South Korean auto, pharma stocks rattled after Trump threatens to impose 25% tariffs

By Mike Murphy

President Donald Trump leaves after the "Board of Peace" meeting during the World Economic Forum's annual meeting in Davos on Jan. 22.

South Korean automaker and pharmaceutical stocks were falling after President Donald Trump late Monday threatened to raise tariffs on some Korean imports to 25% because that country's government has been too slow to approve a trade deal reached last year.

"South Korea's Legislature is not living up to its Deal with the United States," Trump said in a social-media post, noting that a trade agreement reducing U.S. tariffs from South Korea from 25% to 15% was reached last July, and reaffirmed in October. "Why hasn't the Korean Legislature approved it?"

Trump said that because the deal has yet to be enacted, tariffs on South Korean autos, lumber and pharmaceuticals would rise to 25%. It was unclear when the tariffs would take effect. Neither the White House nor the Commerce Department immediately responded when asked for additional details.

Also read: Investors may be led into a trap as stock market discards new tariff threats, analyst warns

Bloomberg News reported that South Korea's industry minister, who's currently visiting Canada, will travel to the U.S. to further discuss the matter with Commerce Secretary Howard Lutnick. Bloomberg also reported the trade deal was introduced in the South Korean parliament in November and will undergo a "thorough review," and that no timetable has been set for its possible passage.

Shares of Hyundai Motor Co. (KR:005380) initially fell more than 4% following Trump's announcement, but recovered and were last in positive territory, while Kia Corp. (KR:000270) was down about 2% after falling more than 5% earlier. Many South Korean pharma stocks, including Yuhan Corp. (KR:000100), Hanmi Pharmaceutical (KR:128940) and Chong Kun Dang Pharmaceutical (KR:185750), also declined, though most had improved from their session lows.

The broader Korean stock market, the Kospi KR:180721, brushed off those losses and was recently up around 1%.

After a lull in the fall, Trump has been pushing tariff threats again in the new year. Last week he called off punitive tariffs against eight European allies who oppose his desire to acquire Greenland, and over the weekend he threatened Canada with 100% tariffs if it makes a free-trade deal with China. Prime Minister Mark Carney said Sunday there are no plans for such a deal, and said a recent trade agreement between Canada and China was merely to resolve some tariff quota issues.

-Mike Murphy

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01-26-26 2125ET