JAKARTA - South Korea's ruling Democratic Party pledged on Tuesday, January 27, to pass legislation tied to a $350 billion investment package by the end of February, hours after President Donald Trump threatened to raise tariffs on Korean goods from 15 to 25 percent.

Trump announced the increase on January 27 in a social media post, citing Seoul's failure to enact a trade framework the two countries agreed to last July. The threatened tariffs would apply to automobiles, lumber, pharmaceuticals and other goods.

South Korean lawmakers have previously submitted five bills to the National Assembly on November 26, 2025, to establish a fund managing the massive investment pledge, but legislative action has stalled. Democratic Party floor spokesperson Kim Hyun-jung said Tuesday the party would coordinate with the government to organize swift debate and approval.

The investment deal, finalized during Trump's October 29 visit to Seoul, splits the $350 billion into $200 billion in cash payments capped at $20 billion annually and $150 billion for shipbuilding projects. Under the agreement, South Korea received a reduced 15 percent tariff rate, down from the 25 percent Trump initially imposed in April under what he termed reciprocal tariffs.

Shares of Hyundai Motor and Kia dropped as much as 4.8 percent and 6 percent respectively in Tuesday trading before recovering slightly. The companies are among the largest importers of vehicles from South Korea to the United States.

Together, Hyundai and Kia employ more than 350,000 people worldwide, including tens of thousands of local and foreign workers at overseas plants such as Hyundai’s Alabama facility and Kia’s Georgia factory.

The threat comes as South Korea grapples with economic headwinds. The economy grew just 1 percent in 2025, its slowest expansion since 2020, and contracted 0.3 percent in the fourth quarter. South Korea's export-heavy economy sent $131.6 billion worth of goods to the United States in 2024, making America its second-largest trading partner after China.

Industry Minister Kim Jung-kwan, currently in Canada, will travel to Washington for talks with Commerce Secretary Howard Lutnick.