Trump has publicly expressed frustration with South Korea's handling of a trade agreement, citing legislative delays that have prevented ratification of a deal originally scheduled for July 2025.

Legislative Standoff Over Trade Agreement

According to Trump's Truth Social post, the Korean legislature has failed to ratify the trade deal despite apparent executive-level support. Trump indicated that President Lee had reaffirmed commitment to the agreement, suggesting that the delay stems from legislative rather than executive branch resistance.

Diplomatic Implications

The public criticism highlights potential strain in trade relations between the United States and South Korea. Trump's decision to address the issue through social media suggests growing impatience with the ratification process.

The situation underscores the complex dynamics involved in international trade negotiations, where executive agreements require legislative approval for implementation. Trump's public statement indicates that the delay may be affecting broader diplomatic discussions between the two countries.

South Korea's economy faced significant headwinds in the final quarter of 2024, with the Bank of Korea reporting a 0.3% contraction in GDP compared to the previous quarter. The economic slowdown reflects weakening momentum in key growth drivers that had supported the economy earlier in the year, including net exports, domestic consumption, and fiscal stimulus measures.

Net Exports Drive Quarterly Decline

The most significant factor in the quarterly contraction was the sharp reversal in net exports performance. After contributing positively with a 2.1% increase in the September quarter, net exports declined by 2.1% in the final three months of the year. The deterioration may have been influenced by the won's weakness during the period, which likely inflated import costs when converted to real terms.

Domestic Demand Shows Broad Weakness

Domestic economic activity displayed concerning trends across multiple sectors. Private consumption growth decelerated sharply to 0.3% from 1.3% in the previous quarter, indicating reduced household spending momentum. Government spending provided limited support with modest growth of 0.6%, suggesting the waning impact of earlier fiscal stimulus measures.

Investment activity contracted significantly, with facility investments declining 1.8% and construction investments falling 3.9%. These declines highlight the challenges facing business confidence and capital formation in the current economic environment.

Housing Market Pressures Persist

The property sector remains a critical policy challenge, with Seoul apartment prices continuing their upward trajectory for the 50th consecutive week as of January 12, according to the Korea Real Estate Board. This persistent price growth has created a policy dilemma for authorities who are reluctant to ease regulations due to concerns about escalating household debt levels and potential financial instability.

Strong External Balance Provides Support

Despite domestic challenges, South Korea maintained a robust external position throughout the year. The country recorded a current-account surplus of approximately $118.00 billion, supported by improved trade conditions including declining energy costs and rising semiconductor prices. The government projects this surplus could reach $135.00 billion by 2026.

Economic Outlook and Structural Concerns

The Bank of Korea projects overall GDP growth of 1% for 2025, reflecting the challenging economic environment. The recovery shows signs of becoming increasingly uneven, with semiconductor-related export industries continuing to outperform while small businesses, construction, and interest-rate-sensitive consumers struggle to regain momentum. This K-shaped recovery pattern raises concerns about underlying structural imbalances that may not be fully captured in headline growth figures.

Currency pressures have already influenced policy decisions, with Seoul reportedly considering delays to its commitment to invest up to $20.00 billion in the United States this year. Meanwhile, financial markets have shown resilience, with the benchmark Kospi index continuing its upward trend following a 76% increase in 2024.