It added that South Korea’s Industry Minister Kim Jung-kwan, who is currently in Canada, will visit Washington as soon as possible to meet US Commerce Secretary Howard Lutnick.
South Korea exported goods worth about $123bn (£90bn) to the US last year, making it the second largest export market after China. Of these, car exports accounted for about $30bn.
Initially, shares in Korean carmakers Hyundai and Kai fell by up to 6% in response to Trump’s announcement, but they then recovered to close only about 1% lower.
South Korea’s benchmark Kospi stock index also reversed early losses to end the day up 2.7%.
Analysts said investors were sceptical whether the threatened tariff rise would go ahead, pointing to Trump’s recent U‑turn on imposing extra tariffs on European trade partners over opposition to US plans to acquire Greenland.
“With a delegation on its way from Seoul to Washington, markets are viewing this latest twist as more carrot than stick,” said Derren Nathan, head of equity research at Hargreaves Lansdown.
Seoul and Washington reached a deal last October, which included a pledge from South Korea to invest $350bn (£256bn) in the US, some of which would go to shipbuilding.
The following month, the two countries agreed that the US would reduce tariffs on some products once South Korea started the process to approve the deal.
The agreement was submitted to South Korea’s National Assembly on 26 November and is currently being reviewed. It is likely to be passed in February, according to local media.
Tariffs are paid by companies who import products. In this case, US firms will pay a 25% tax on goods they buy from South Korea.
Trump has frequently used tariffs as leverage to enact foreign policy during his second term in the White House.
On Saturday, he threatened Canada with a 100% tariff if it struck a trade deal with China.
On Monday, Chinese officials said its “strategic partnership” agreement with Canada is not meant to undercut other countries.
Canadian Prime Minister Mark Carney has said his country was not pursuing a free trade deal with China and has “never” considered it.
He added that Canadian officials have made their position clear to their American counterparts.
Before that, Trump said he would impose import taxes on eight countries – including the UK – who opposed US plans to seize Greenland, an autonomous territory in the Kingdom of Denmark which is a member of Nato.
He later backed down from the tariff threat over Greenland citing progress towards a “future deal” over the island, but the episode strained US relations with Denmark and other Nato allies.
