South Korean shares closed higher on Friday as investors speculated lesser effect on the domestic economy due to US President Donald Trump's tariffs, set to be in place from March 12.

The country's bilateral free trade agreement with the US is expected to cushion the economic impact of the impositions.

The Korea Composite Stock Price Index, or Kospi, was up by 7.88 points, or 0.3%, to close at 2,591.05. The Kosdaq rose 7.04 points, or 0.9%, to 756.32.

In economic news, South Korea's unemployment rate hit 3.7% in January, the same as the same month of the previous year, and down 1 percentage point from 3.8% recorded in December, data from Statistics Korea indicated Friday.

The seasonally adjusted unemployment rate was 2.9%, down 0.8 percentage points from December.

The number of unemployed people rose by 11,000, or 1%, on-year to hit 1.083 million in January.

The number of employed people rose 0.5%, or 135,000 to hit 27.878 million last month from the year-ago period.

In coprorate news, Hanwha Aerospace (KRX:012450) completed acceptance tests for its 1,000-horsepower diesel engine for the K9 self-propelled howitzer, the aerospace company said.

The year-long trials, carried out in South Korea, Egypt, and other regions, covered over 10,000 km in diverse environments, including deserts.

Hanwha plans to equip Egypt's K9A1EGY units with the new engine, with deliveries set for the first quarter of 2026.

K9 is touted as a popular artillery system adopted by countries, including six NATO members. It can deliver consistent, accurate, rapid effects at ranges of over 40km with high rates and volumes of fire.

Shares of Hanwha Aerospace rose more than 3% at market close on Friday.