Although President Donald Trump declared a "global 15% tariff" on every country in the world following the U.S. Supreme Court's ruling invalidating "reciprocal tariffs," tariffs on major products that Korea exports to the United States are expected to see no change.
There is, however, a variable. Countries such as Brazil and China, which had faced tariffs higher than 15%, could benefit relatively, creating the possibility that Korea and others could be hurt. Also, if President Trump later takes additional steps to introduce tariffs higher than the global 15% tariff, it could become an obstacle for Korea's exports.
◇ Even if the U.S. implements a "global tariff," little change seen in tariffs on Korea's top 10 exports to the U.S.
According to the Ministry of Trade, Industry and Resources and the Korea International Trade Association on the 23rd, the top 10 items Korea exported most to the United States last year were ▲ automobiles ▲ semiconductors ▲ auto parts ▲ computers ▲ petroleum products ▲ batteries and storage batteries ▲ electrical apparatus for power ▲ wireless communication devices ▲ prime movers and pumps ▲ soap, toothpaste, and cosmetics. By share of total exports to the U.S., automobiles (24.5%), semiconductors (11.2%), and auto parts (6.2%) were the big three. Each of the remaining items accounted for 5% or less.
The tariff the Supreme Court found invalid this time had been imposed under the International Emergency Economic Powers Act (IEEPA). Accordingly, four categories that had tariffs under Section 232 of the Trade Expansion Act—automobiles and auto parts (15% tariff), and semiconductors and computers (exempt)—will keep their existing tariffs.
The remaining six items will be replaced by a global tariff based on Section 122 of the Trade Act. Under this provision, the U.S. president has the authority to impose tariffs of up to 15% for up to 150 days to address balance of payments issues. After signing an executive order to impose a "10% global tariff" worldwide starting at 12 a.m. on the 24th Eastern time, President Trump declared that he would raise that tariff from 10% to 15%.
Even if the 15% global tariff is implemented, tariffs applied to Korea's major export items to the U.S. are expected to see little change. Going forward, U.S. tariffs will operate by adding the "most-favored-nation (MFN) tariff" to the "global tariff (15%)," and because Korea has a free trade agreement (FTA) with the United States, the MFN tariff is close to 0%. An official at the Ministry of Trade and Industry (MOTI) said, "Even when adding the 15% global tariff to the MFN tariff, it increases only slightly to about 15.2%."
Tariffs are also expected to remain at zero for petroleum products, the No. 5 item by export value to the U.S. From the outset, energy-related items such as petroleum products were excluded from reciprocal tariffs, and President Trump kept those exclusions when imposing the new tariffs.
◇ Unlimited tariffs possible under Section 301 of the Trade Act… many variables
If the United States applies the 15% global tariff, some countries could benefit relatively. That is because countries that had been subject to reciprocal tariffs higher than 15% could enjoy the effect of lower tariffs.
Cho Sung-dae, head of trade support at the Korea International Trade Association, said, "Countries such as China and Brazil, which had faced higher reciprocal tariffs than Korea, gain an advantage, while countries such as Singapore and the United Kingdom, which had faced lower tariffs, are put at a disadvantage," adding, "Korea's export competitiveness could weaken compared with China, where tariffs have been lowered."
In addition, if the United States operates by adding the global tariff and the most-favored-nation (MFN) tariff, gains and losses could differ by country. Cho said, "Japan and the European Union (EU) had the same 15% reciprocal tariff as we did, but if the United States going forward includes the MFN tariff in the global tariff, Japan and the EU could see higher tariffs than we do, which is a point favorable to us."
Meanwhile, there is also speculation that President Trump could additionally apply tariffs higher than the 15% global tariff. Under Section 301 of the U.S. Trade Act, unlimited retaliatory tariffs can be imposed without rate limits on unfair trade.
That day, the government held a public-private joint countermeasure meeting to discuss responses to the U.S. ruling that reciprocal tariffs are illegal and to additional tariffs. Minister Kim Jung-kwan of the Ministry of Trade and Industry (MOTI) said regarding the possibility that Korea could be included among those surveyed under Section 301, "We are not presuming anything," adding, "We need to manage various trade issues so as not to become a target." The Korean government plans to proceed as scheduled with the $350 billion U.S. investment projects promised through reciprocal tariff negotiations.