US-South Korea Trade Tensions Escalate Over $350 Billion Investment Package and Pharmaceutical Tariff Dispute

Welcome to South Korea Tariff News and Tracker, your key source for the latest updates on tariffs, trade, and U.S.–South Korea economic relations. It’s September 28, 2025, and today we’re diving into the ongoing turbulence between Washington and Seoul over tariffs and investment deals under the Trump administration.

The headline story continues to be the deadlock over the massive $350 billion U.S. investment package tied to the U.S. lowering tariffs on South Korean goods. This agreement, formed in a July handshake between President Donald Trump and South Korean President Lee Jae Myung, dropped tariffs from 25 percent to 15 percent, but came with Trump’s expectation that South Korea would pay the full $350 billion “upfront.” According to South Korea’s National Security Adviser Wi Sung-lac and confirmed in multiple interviews aired on Channel A News and Reuters, paying this amount in cash is “objectively and realistically not a level [South Korea is] able to handle.” Wi emphasized this was not a negotiating tactic, but a hard reality, warning that such an outlay could trigger a crisis comparable to the 1997 Asian financial crisis. Even with foreign exchange reserves at $410 billion, President Lee insists the country needs safeguards like currency swaps to avoid economic instability.

For listeners tracking rate specifics, the current U.S. tariff rate on South Korean goods remains at 15 percent following the July deal. However, the implementation details are far from settled due to the ongoing dispute over the investment structure. South Korea prefers spreading the funds through loans, guarantees, and equity, while Washington demands cash and greater control—a sticking point that has left negotiations at a standstill. The U.S. Commerce Secretary and Treasury are maintaining pressure, especially ahead of next month’s Asia-Pacific Economic Cooperation summit in Seoul, which both nations hope could bring resolution.

Turning to related industry news, President Trump recently announced a 100 percent tariff, starting October 1st, on any branded or patented pharmaceutical product imported into the U.S. unless the company is manufacturing it on American soil. This escalation directly affects major South Korean pharmaceutical exports and adds new dimensions to trade friction.

On top of the tariff battle, U.S. policy is reportedly shifting to target electronics based on the number of semiconductor chips embedded, which could significantly increase the tariff burden for South Korean consumer tech brands.

Negotiations aren’t confined to tariffs alone. South Korea’s finance minister said the country has concluded currency exchange talks with Washington to ease volatility in the won, but pointedly noted these arrangements are separate from tariff discussions and do not expand currency swap lines.

Finally, diplomatic strains have also grown after recent U.S. immigration enforcement actions at South Korean-owned industrial sites, with South Korean nationals detained and deported—adding further complications to already fraught trade negotiations.

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