[Editorial] As the U.S. Unveils a New Tariff Weapon, Korea Must Act Quickly to Minimize Damage

The Donald Trump administration has turned to a new tariff weapon after court rulings slowed its push for reciprocal tariffs. It plans to impose additional duties on trading partners by using Section 301 of the Trade Act of 1974. South Korea is already subject to the United States' 10% global tariff, and there are concerns that this move could once again worsen the export environment.
On the 2nd local time, the Office of the United States Trade Representative (USTR) said South Korea's legal framework and enforcement system for banning imports of goods made with forced labor were insufficient, and classified the country, along with China, Japan and the United Kingdom, as subject to a 12.5% tariff. It also included South Korea in an investigation into sectors with excess production, raising the possibility that key industries such as semiconductors and cars could face additional tariff pressure. If a finding of excess production is made, tariffs would rise by another 5 percentage points, bringing the total burden to as much as 17.5%.
South Korea's exports and stock market have been buoyed by the semiconductor supercycle, but additional U.S. tariffs could still be a significant burden. Last year, South Korea proposed a $350 billion investment plan in the United States and eased its tariff burden, while its effective tariff rate on exports to the U.S. fell to 8.7%, ranking sixth among the top 10 U.S. exporters. However, there is growing concern that this new measure could largely undo the gains made in negotiations. The European Union (EU) also plans to sharply reduce its duty-free steel quota starting next month and raise tariffs on excess volumes to 50%, making the trade environment even less favorable.
Section 301 of the Trade Act of 1974 has been used by the United States in sanctions against China, and is seen as a stronger pressure tool than reciprocal tariffs. The government has repeatedly explained to Washington why the measure is unfair, but it could not avoid the U.S. assessment that its system for controlling imports of goods made with forced labor is inadequate. Even so, because this move is based not on forced labor problems within South Korea but on an evaluation of efforts to block imports of goods produced through forced labor overseas, there is room to respond through institutional reform.
The United States plans to finalize the measure early next month after taking written comments and holding a public hearing. Immediately after the USTR announcement, Trade, Industry and Resources Minister Kim Jung-kwan said in a video meeting with Howard Lutnick, the United States Secretary of Commerce, that he had reaffirmed that the tariff applied to South Korea would not exceed the 15% level agreed last year. Even so, South Korea must review the legal framework and enforcement system cited as the basis for the tariffs and move ahead with the necessary reforms. It should also take note of how Canada, the EU, Mexico and Indonesia were included in relatively lower-tariff groups after making institutional changes.
South Korea must also prepare thoroughly for the excess-production investigation. Working closely with the semiconductor and car industries, it should explain the transparency of its pricing policies and the fairness of market competition. It should also stress that Korean companies are contributing to the stability and security of U.S. supply chains. The government must prove its response capability through concrete results, not just the slogan of 'active communication.' South Korea, which has promised $350 billion in investment in the United States, should not face a final decision while carrying the stigma of being a country with an inadequate system for blocking imports of goods made with forced labor.