The 10% 'global tariff' introduced by the Trump administration will expire on July 24, following a U.S. Supreme Court ruling that deemed extensive reciprocal tariffs illegal. A replacement under Section 301 of the Trade Act is expected to be announced soon, raising questions about whether the tariff rate applied to South Korea will exceed the 15% agreed upon in the U.S.-Korea trade deal.
According to reports from Yahoo Finance and others on July 20, the Trump administration imposed the 10% global tariff in February after the Supreme Court ruled that broad reciprocal tariffs based on the International Emergency Economic Powers Act (IEEPA) were unlawful. Tariffs under Section 122 of the Trade Act can only be imposed for a maximum of 150 days without congressional approval. Therefore, unless Congress acts to extend it, the 10% global tariff will end on July 24.
The Trump administration is expected to replace it with tariffs under Section 301 of the Trade Act, which allows for retaliatory measures if foreign government policies or practices are deemed unfair or discriminatory and infringe on U.S. trade interests.
In a recent report, U.S. investment bank Raymond James analyzed that the White House is likely to develop a new tariff system based on the existing global reciprocal tariff levels.
Since March, the Office of the U.S. Trade Representative (USTR) has been conducting investigations under Section 301 regarding 'forced labor' and 'structural overproduction' in various countries. A total of 16 entities have been identified for overproduction, while 60 entities are linked to forced labor, with South Korea included in both categories.
For forced labor, a proposal has been made to impose a 12.5% tariff on certain countries, including South Korea. With public hearings already concluded, the USTR may announce the final tariff as early as this week, coinciding with the expiration of the global tariff.
In contrast, there are no specific plans yet for tariffs related to overproduction. Given the procedures for announcing tariff proposals and gathering public comments, it seems unlikely that a decision will be finalized before July 24.
The concern is that the overproduction tariff could be added to the forced labor tariff in the future. The proposed forced labor tariff for South Korea is 12.5%, and if the overproduction tariff exceeds 2.5%, it could surpass the 15% cap established in the U.S.-Korea trade agreement.
Last July, the U.S. and South Korea agreed to lower tariffs on South Korean products from 25% to 15% in exchange for South Korea's $350 billion investment in the U.S.
USTR representative Jamieson Greer stated last month that the administration would respect the tariff cap outlined in the U.S.-Korea trade agreement. However, it remains unclear how the final rates will be adjusted after imposing the overproduction tariff, whether they will be set at 15% or if additional conditions will be applied to reduce tariffs.
* This article has been translated by AI.
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