South Korean Markets Tumble After Trump Imposes 25% Tariff

South Korean financial markets witnessed a sharp decline on Monday following President Trump's unexpected announcement of a 25% tariff on South Korean imports, exacerbating trade disputes with a key ally. The South Korean won dropped to a two-week low, reaching 1,378 per dollar, after Trump disclosed the tariff on social media. The new tariff, set to take effect on August 1, targeted all imports from South Korea and cited longstanding trade imbalances as the reason for imposition.

In a letter to South Korean President Lee Jae-myung, Trump emphasized the need for more balanced and fair trade relations, cautioning that any retaliatory tariffs by South Korea would prompt an increase in the US tariff proportionally. Trump highlighted the persistent trade deficit with South Korea as a major economic threat and national security concern, attributing it to unfair tariff and non-tariff practices. He proposed an exemption from tariffs for South Korean companies relocating manufacturing to the US, offering expedited approvals for such moves.

The move triggered a risk-off sentiment across emerging markets, with investors closely monitoring the unfolding trade dynamics between the US and South Korea. Stay tuned for more updates on this evolving situation.