The Donald Trump administration imposed a 10–12.5% "forced labor tariff" on 60 countries under Section 301 of the Trade Act. A 12.5% tariff was applied to Korea.
On the 23rd (local time), the Office of the United States Trade Representative (USTR) finalized a 10–12.5% tariff on 60 countries, citing imports of products made with forced labor.
Korea, along with Japan, was hit with a 12.5% tariff.
If the most-favored-nation rate for a particular import is less than 12.5%, it is combined with the forced labor tariff to reach 12.5%, and if it is 12.5% or higher, the forced labor tariff is applied at 0%. The combined rate is set to be at least 12.5%.
A 10% rate applied to 17 countries, including the United Kingdom, India, Mexico, Canada and Argentina. The remaining countries were assessed 12.5%.
The new tariff does not apply to items such as steel and aluminum, automobiles and parts, which face separate tariffs on national security grounds. Some foods and agricultural products, fertilizers and energy products are also excluded from the tariff.
The USTR emphasized, "Setting a cap on total tariffs in this manner is consistent with agreements such as reciprocal trade agreements and is suitable for enabling these economic actors to create and effectively enforce import bans on products made with forced labor."
Earlier, in March, the USTR launched an investigation under Section 301 of the Trade Act, saying that imports of products made through structural overproduction and forced labor burden U.S. trade.
Section 301 of the Trade Act grants the U.S. administration the authority to respond to unfair or discriminatory practices and policies of foreign governments, including by imposing tariffs. Korea was subject to both investigations.
Previously, in February, the U.S. Supreme Court ruled that the Trump administration's reciprocal tariffs imposed on countries under the International Emergency Economic Powers Act (IEEPA) were unlawful.
In response, the Trump administration filled the void left by the vanished reciprocal tariff with a 10% global tariff under Section 122 of the Trade Act. However, Section 122 is valid for a maximum of 150 days and expired at 12 a.m. on the 24th.
When the global tariff also expired, the Trump administration replaced it with Section 301 tariffs.
However, no tariff notice has yet been issued for the overproduction sector. The tariff rate is also not yet known.
Tariffs ultimately imposed on Korea will also depend on the results of the investigation into the overproduction sector.
Through a trade agreement with the United States, including $350 billion in U.S.-bound investment last year, Korea lowered a 25% tariff to 15%.
If the sum of the forced labor tariff and the overproduction tariff, expected to be imposed soon, exceeds 15%, it would be less favorable than the trade deal.
The New York Times (NYT) reported that tariff measures related to overproduction could be implemented within the next few weeks.