SEOUL, July 24 (AJP) -South Korean exports to the United States will effectively face a tariff floor of 12.5 percent under President Donald Trump's new Section 301 action targeting imports linked to forced labor, but Seoul avoided being placed in the blanket tariff category after Washington cited its bilateral trade agreement with Korea.
Trump on Thursday signed a memorandum directing the U.S. Trade Representative to impose tariffs of 10 percent to 12.5 percent on imports from 60 trading partners following Section 301 investigations into whether they failed to prohibit or effectively enforce bans on imports made with forced labor.
The measures took effect at 12:01 a.m. Friday, immediately replacing the temporary 10 percent global tariff imposed under Section 122 of the Trade Act after the Supreme Court struck down Trump's reciprocal tariffs earlier this year.
Rather than imposing a flat 12.5 percent tariff on Korean goods, however, the White House created a separate category for South Korea, Japan and Switzerland.
Under the presidential memorandum, products from South Korea whose existing most-favored-nation (MFN) tariff is below 12.5 percent will be subject to an additional Section 301 duty sufficient to raise the total tariff to 12.5 percent. Products already facing MFN duties of 12.5 percent or higher will pay no additional Section 301 tariff.
The White House said capping the total duty at 12.5 percent was "feasible, consistent with the terms of the Agreements on Reciprocal Trade or similar arrangements," and was intended to encourage Korea and the other economies to fulfill commitments on forced-labor import prohibitions.
That treatment differs from the majority of economies investigated under Section 301, which were assigned either a flat 10 percent or flat 12.5 percent tariff.
South Korea therefore avoided being classified among countries that failed outright to adopt forced-labor import prohibitions, while also avoiding an across-the-board additional tariff.
Seoul dispatched Trade, Industry and Energy Minister Kim Jung-kwan to Washington ahead of the announcement, coinciding with the launch of the Korea-U.S. Shipbuilding Partnership Center, to advance the "Make American Shipbuilding Great Again" (MASGA) initiative — the centerpiece of South Korea's proposed $350 billion investment package under the bilateral trade and tariff agreement.
The White House memorandum followed USTR's final determination that the acts, policies and practices of all 60 investigated economies were unreasonable and burdened U.S. commerce. The investigations concluded that the economies had either failed to prohibit or failed to effectively enforce bans on imports produced with forced labor.
The USTR fact sheet described the action as applying to the top 60 U.S. trading partners accounting for 99.4 percent of U.S. imports, calling it the "most sweeping international labor rights action" ever undertaken by the United States.
"The United States is the only country in the world to adopt, and effectively enforce, a ban on imports made with forced labor," USTR said, urging trading partners to adopt comparable restrictions.
The memorandum also provides broad product exemptions.
Products already subject to Section 232 national security tariffs, including steel and aluminum, are excluded from the new duties, as are informational materials, donations and accompanied baggage. Additional exemptions cover raw materials that could create domestic supply shortages, products whose tariffs could disrupt the U.S. economy, goods unavailable from alternative suppliers, and products whose exemption would better encourage trading partners to adopt forced-labor import bans.
The accompanying 55-page Annex modifies the Harmonized Tariff Schedule of the United States by creating country-specific tariff headings.
For South Korea, it establishes two separate tariff codes: one for products already subject to MFN tariffs of at least 12.5 percent, which receive no additional duty, and another for products with MFN tariffs below 12.5 percent, which are subject to a Section 301 duty bringing the total tariff to 12.5 percent. The Annex makes the changes effective for goods entering the United States from 12:01 a.m. Eastern Time on July 24.
The White House said the structure preserves reciprocal trade arrangements while maintaining pressure on trading partners to strengthen enforcement against forced-labor imports. For South Korea, it means many exports will continue to face an overall tariff burden capped at 12.5 percent rather than a blanket additional duty, although Seoul still faces the prospect of further U.S. tariffs from a separate Section 301 investigation into structural excess capacity later this year.
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