President Donald Trump said that he will either renegotiate or terminate a “horrible” trade deal with South Korea, Reuters reported late Thursday.
The president also said he wants South Korea to pay for the $1 billion THAAD missile defense system, Reuters said.
Responses to Trump’s comments soon arose, with an official from South Korea’s automakers association telling Reuters that the group is now concerned about “the uncertainty” of the free trade agreement.
Shares in Hyundai Motor fell as much as 2.4 percent following Trump’s comments. South Korea’s won turned weaker on the comments.
An official from South Korea’s Finance Ministry said that the U.S. administration had not yet requested anything on the free trade agreement.
And on the issue of THAAD payment, a foreign policy advisor to South Korea’s presidential front-runner, Moon Jae-in, said that Seoul shelling out for the missile defense system is an “impossible option,” according to Reuters.
Earlier this week, Yonhap news agency reported that the U.S. military had begun transferring parts of THAAD into a planned deployment site in South Korea.
The system, the Terminal High Altitude Area Device, is designed to defend South Korea and Japan from missile attack, and it could be operational as soon as summer 2017. North Korea and its unpredictable leader Kim Jong Un possess nuclear weapons and make a habit of regularly threatening neighbors.
THAAD uses radar to track when a ballistic missile is launched and then intercepts and destroys the missile before it descends onto its target.
Now, Trump’s hard stance comes as tensions are on the rise in the Korean Peninsula as U.S. rhetoric takes a sharper tone against the North.
In fact, Trump also told Reuters on Thursday that “there is a chance that we could end up having a major, major conflict with North Korea. Absolutely.” Still, the president had emphasized to the news outlet that he would prefer a peaceful resolution to the situation in the region.
This is a breaking news story. Check back for updates.
—Reuters and CNBC’s Seema Mody contributed to this report.