12.5% Tariff Hit: South Korea Faces New U.S. Trade Penalties

Translation result. [Herald Economy=Reporter Seo Sang-young] The Blue House said on June 3 that it will do its utmost to ensure the balance of benefits under the existing Korea–U.S. tariff agreement is not undermined, after the U.S. Trade Representative (USTR) announced plans to impose an additional 12.5% tariff on countries, including South Korea, that failed to block goods produced with forced labor.

In a statement, the Blue House said it has maintained close communication with U.S. officials through written submissions, bilateral consultations and other channels since the USTR launched a Section 301 investigation into imports produced with forced labor on March 12.

The government said it will actively engage in the comment process (deadline July 6) and the public hearing scheduled for July 7, while also taking into account the ongoing Section 301 review into overproduction.

The USTR announced on June 2 that it plans to impose additional tariffs of either 10% or 12.5% on imports from 60 economies that failed to prevent trade in products made with forced labor.

South Korea was placed in the group of 54 economies that it found had failed both to adopt and to effectively enforce import bans on goods made with forced labor, and therefore faces a 12.5% tariff.

That group includes most of the economies under review, including Australia, Brazil, China, Japan, Malaysia, Norway, Russia, Saudi Arabia, Singapore, Switzerland, Taiwan, Thailand, Turkey, the United Kingdom and Vietnam.

The USTR said it judged the policies and practices of those 60 economies to be “unreasonable,” concluding they placed burdens on or constrained U.S. commerce.

Earlier, the USTR initiated the March investigation under Section 301 of the Trade Act as an alternative to reciprocal tariffs that the U.S. Supreme Court found unlawful in February.

The probe examines both overproduction (overcapacity) and imports of products made with forced labor and could result in additional tariffs on the economies under review. South Korea is subject to both elements of the investigation.