South Korea also ends up with a 12.5% tariff... Is Trump shaking up the U.S.-South Korea deal again?

[Financial News] As the Trump administration rolls out a new tariff system to replace reciprocal tariffs, South Korea will also effectively face a new 12.5% tariff. If an additional 'overcapacity tariff' is announced soon, there are concerns that the 15% tariff level secured through difficult South Korea–United States trade talks could be undermined.
On the 23rd (local time), the Office of the United States Trade Representative (USTR) announced that it would impose a 10% to 12.5% forced-labor tariff on 60 countries that do not sufficiently block imports of products made with forced labor, citing Section 301 of the Trade Act of 1974.
South Korea and Japan were structured so that the total tariff, including the existing most-favored-nation (MFN) rate, would be at least 12.5%. If a product's MFN tariff rate is below 12.5%, an additional forced-labor tariff is added to bring the total to 12.5%. If the item is already subject to a tariff of 12.5% or more, no additional tariff is imposed.
The measure takes effect at 12:01 a.m. on the 24th. It coincides exactly with the end of the 10% global tariff that had been applied in place of reciprocal tariffs after the Supreme Court of the United States ruled that the tariffs based on the International Emergency Economic Powers Act (IEEPA) were illegal.
For South Korea, the bigger issue is not the tariff rate itself, but the fact that the legal basis for the tariff has changed once again. After reciprocal tariffs were blocked, the Trump administration used Section 122 of the Trade Act of 1974 to impose a 10% global tariff. This time, it has again turned to Section 301, effectively keeping the tariff regime in place. In other words, it is continuing its tariff policy by changing only the legal basis.
The biggest focus now is the structural overcapacity tariff that will be announced later. Earlier, USTR designated structural overcapacity and forced labor as separate Section 301 investigation targets in March. This time, only the forced-labor tariff has been finalized, but the overcapacity investigation is also in its final stage, making an additional tariff highly likely.
Market watchers say the key question is whether the combined burden of the two tariffs will exceed the 15% level set in last year's South Korea–United States trade agreement.
South Korea secured an agreement last year to lower the U.S. tariff from 25% to 15% in exchange for conditions including $350 billion in investment in the United States. However, if the effective tariff rate combining the forced-labor tariff and the overcapacity tariff exceeds 15%, South Korean companies could face a less favorable environment than under the existing deal.
Still, some observers say the U.S. government is unlikely to completely overturn the existing agreement. Jamieson Greer, the USTR chief, publicly said last month that the United States would respect the trade agreements it has signed with other countries.
The government and industry are also closely watching how this measure will be linked to the South Korea–United States trade agreement. In particular, sectors with high export exposure to the United States, such as semiconductors, automobiles, and the steel industry, see the scope of the upcoming overcapacity tariff and whether South Korea will receive exemptions as the key variables that will determine the actual burden.

[email protected] Kim Kyung-min Reporter