Trump Tariff Shock: Resilient KOSPI, but Caution Needed as Volatility May Rise

KOSPI Falters Following Trump’s Tariff Hike Remarks
Sharp Declines in Auto Stocks Including Hyundai Motor and Kia
"Trump's Comments Could Trigger a Market Correction After KOSPI’s Surge"

On the 27th, when the KOSPI opened lower following U.S. President Donald Trump's statement about reverting tariffs on Korean products to pre-trade agreement levels, an employee at the Hana Bank headquarters dealing room in Jung-gu, Seoul, was monitoring the stock market and exchange rates. 2026.1.27 Photo by Cho Yongjun

As U.S. President Donald Trump announced plans to raise tariffs on Korean products back to pre-trade agreement levels, the KOSPI faltered just short of the 5,000-point mark. Experts predicted that the KOSPI, which had risen sharply, could use this incident as a pretext for a market correction. However, some analysts noted that if the National Assembly swiftly approves the trade agreement, the impact will likely be short-lived.

KOSPI Falters Following Trump’s Tariff Hike Remarks

On the 27th, the KOSPI opened at 4,932.89, down 16.70 points (0.34%) from the previous trading day. After the opening, it briefly fell to the 4,890-point range but recovered its losses and turned upward, reaching 4,962.17 as of 9:40 a.m., up 0.25% from the previous session.

The KOSPI was heavily influenced by President Trump’s tariff comments. On the 26th (local time), President Trump posted on the social media platform Truth Social, saying, “The Korean National Assembly is not honoring the agreement with the United States,” and “Since the Korean National Assembly has not legislated the historic trade agreement within its authority, I am raising all reciprocal tariffs on Korea-including automobiles, lumber, pharmaceuticals, and all other products-from 15% to 25%.”

President Trump also stated, “President Lee Jaemyung and I reached a great agreement for both countries on July 30, 2025, and I reaffirmed those terms when I was in Korea on October 29, 2025. Why hasn’t the Korean legislature approved the agreement?” This is interpreted as criticism of the National Assembly’s failure to pass the “Special Act on Strategic Investment Management between Korea and the United States” (Special Act on Investment in the U.S.).

Following Trump’s remarks, shares of automakers such as Hyundai Motor and Kia led the declines. As of 9:32 a.m., Hyundai Motor was trading at 477,500 won, down 3.05% from the previous session. Kia was also trading at 148,900 won, down 4.06%, while Hyundai Mobis fell by 2.90%.

Experts noted that, given the recent surge in the Korean stock market, Trump’s tariff shock could serve as a catalyst for a correction. Lee Hyoseop, Senior Research Fellow at the Korea Capital Market Institute, said, “After the KOSPI broke through 5,000, there has been a general sense of investor caution about the high levels. In a phase where a natural correction could occur, this incident could provide the trigger. With many investors using leverage these days, the Trump shock is bound to have a negative impact on the market.”

Lee Namwoo, Professor at Yonsei University’s Graduate School of International Studies and Chairman of the Korea Corporate Governance Forum, also commented, “Our stock market has surged too much over the past 7-8 months, so it may react sensitively to external shocks. The Trump shock is likely to increase market volatility.” He added, “While I’m concerned about a KOSPI correction, there could be even bigger aftereffects if the KOSDAQ is artificially propped up. With stock prices surging and valuations rising, investors are tempted to sell, and external shocks could provide the excuse.”

On the 27th, when the KOSPI opened lower following U.S. President Donald Trump's statement about reverting tariffs on Korean products to pre-trade agreement levels, an employee at the dealing room of Hana Bank's headquarters in Jung-gu, Seoul, was monitoring the stock market and exchange rates. 2026.1.27 Photo by Cho Yongjun

“Some Expect the Shock to Be Short-Lived”

However, there are also forecasts that the impact of this situation will be short-term. Han Ji-young, a researcher at Kiwoom Securities, said, “While this will be a burden on the market, especially for the auto sector, the National Assembly’s approval issue is only a matter of time. Therefore, this reciprocal tariff hike should be viewed as a temporary noise with only a limited effect on the market trend.”

Han further explained, “Although there has been some recent outflow of funds from the KOSPI, a strategy of increasing exposure to leading stocks remains valid. Upward revisions to market earnings forecasts, additional buying capacity from foreign and institutional investors, and low valuation burdens all remain positive factors to watch.”

Heo Jaehwan, a researcher at Eugene Investment & Securities, said, “The Korea-U.S. tariff issue, which had been forgotten since last September, has resurfaced. It is likely that this issue will be discussed quickly in the February provisional session of the National Assembly.” He added, “Just as the administration withdrew its warning of new tariffs on European products over the Greenland dispute, there has not yet been a case where the administration actually implemented tariffs threatened by President Trump. While a storm is expected, it will eventually pass.”