Trump's 10% Global Tariff Set to Expire; 'Section 301' Tariffs Imminent

The 10% global tariff imposed by the Donald Trump administration is set to expire on July 24 (local time), just days away, following a U.S. Supreme Court ruling that declared reciprocal tariffs unlawful.

As the Trump administration is expected to soon introduce Section 301 tariffs to replace the global tariffs, the primary focus is whether the 15% cap established through the trade agreement between South Korea and the U.S. will be maintained.

Since March, the Office of the United States Trade Representative (USTR) has been investigating various countries under Section 301 of the Trade Act, citing two categories: overproduction and forced labor.

This follows the U.S. Supreme Court's ruling in February, which led to the expiration of the 10% global tariff under Section 122 of the Trade Act, set for 150 days later on July 24.

The investigation was initiated on the grounds that imports of products manufactured through structural overproduction and forced labor place a burden on U.S. trade.

Section 301 of the Trade Act grants the administration the authority to respond to unfair or discriminatory practices and policies of foreign governments, including the imposition of tariffs.

Sixteen economic entities were identified for overproduction and 60 for forced labor, with South Korea being targeted in both categories.

For forced labor, a plan to impose tariffs of 10% to 12.5% was announced early last month, and with public hearings already conducted, only the final announcement remains.

In the case of overproduction, a plan for tariff imposition has not yet been announced.

Considering the time required for public hearings following an announcement, it is physically difficult to finalize the tariffs before July 24.

Consequently, there is speculation that the USTR may take measures such as finalizing the forced labor tariffs within this week to coincide with the expiration of the global tariffs.

Although the process included receiving counterarguments from the targeted countries through public hearings, it is expected that the tariffs will be finalized without major changes, as the forced labor tariffs were intended to replace the global tariffs and the investigation period was short, making it difficult to consider it a comprehensive review.

Once the overproduction tariffs are finalized following a future notice, they will be combined with the forced labor tariffs.

For South Korea, this creates a structure where the overproduction tariff would be added to the 12.5% forced labor tariff already slated for imposition.

The British daily Financial Times (FT) also reported on July 21, citing sources, that President Trump has prepared several options to impose new tariffs on dozens of countries within this week.

On July 20, President Trump announced an additional 50% tariff on most products from Canada, a key ally, based on Section 338 of the Tariff Act of 1930, rather than Section 301 of the Trade Act.

However, it is reported that senior White House officials have advised President Trump to respect the trade agreements signed with various countries last year and to maintain stable relations with trading partners.

This is based on the judgment that there is no need to bear the economic shock and market instability that a trade war could cause ahead of the midterm elections in November.

South Korea has reached an agreement with the U.S. to cap tariffs at 15% through a trade deal.

If the USTR's tariffs under Section 301 exceed 15%, it would effectively be a breach of that agreement.

USTR Representative Jamieson Greer publicly stated early last month that he would respect the tariff ceiling set in the trade agreement.

It is also reported that there was mention of maintaining the 15% cap during communication between high-ranking officials from South Korea and the U.S.

However, it remains unclear how the 15% cap will be managed.

It could be a method of imposing overproduction tariffs separately and then reducing them to the 15% level, or a method of meeting the 15% limit by attaching certain conditions.

Regardless of the method, if a burden of 15% plus alpha is placed on the South Korean government, criticism regarding a violation of the trade agreement will be inevitable.

The USTR recently imposed a 25% tariff on Brazil based on a Section 301 investigation, but the situation is different from that of South Korea.

Brazil did not have a trade agreement signed with the U.S.

The 25% tariff was the result of an investigation into overall unfair practices.

Brazil is also included among the 60 countries under investigation for forced labor.

Once the forced labor tariffs are finalized, they would be added to the 25%.

In late July of last year, South Korea and the U.S. agreed to lower the U.S. reciprocal tariff from 25% to 15% on the condition of $350 billion in investment in the U.S.

Of the $350 billion, $150 billion was allocated for shipbuilding cooperation, and the opening ceremony for the Korea-U.S. Shipbuilding Cooperation Center will be held in Washington D.C. on July 23.
※ Please note: This article was translated by AI and may contain errors.