US tariff risks persist even after the Supreme Court's ruling against reciprocal tariffs. President Donald Trump announced a 10% alternative tariff immediately following the court's invalidation of reciprocal tariffs and threatened to raise it to 15%. Though 24 US states recently filed lawsuits to invalidate the alternative tariffs, Trump will likely seek other tariff mechanisms even if courts rule against him again.
Trump retains multiple legal tools to pursue tariff policies. Section 232 of the Trade Expansion Act, which permits tariffs on national security grounds, is a prime example. This provision previously justified tariffs on steel, aluminum, and automobiles. Section 301 of the Trade Act, allowing retaliatory tariffs against unfair trade practices, is equally powerful. During his first term, Trump wielded this provision to impose tariffs up to 25% on over 4,000 Chinese products.
Amid this uncertainty, Korea's path forward is clear: avoid giving Trump—who is actively seeking ways to raise tariffs—any pretext. The delayed passage of the US Investment Special Act exemplifies this risk. In November last year, Korea and the US signed an MOU on Strategic Investment, agreeing to reduce the 25% tariff on Korean exports to 15% in exchange for Korea's commitment to large-scale US investment and industrial cooperation. The ruling party subsequently introduced the bill to implement this agreement. However, the legislation has been stalled in standing committees for over two months due to budget deliberations and confirmation hearings for the Budget Ministry nominee. This delay gave Trump grounds to declare Korea had broken its promise and threaten to restore the 25% tariff.
The concern is that the bill remains unprocessed even after Trump's warning. The National Assembly immediately formed a special committee to handle the legislation, but activities have been disrupted by disputes over the ruling party's push to pass judicial reform bills. Policy debates between ruling and opposition parties are natural. But essential work must proceed. There is no reason to delay legislation that faces no disagreement and requires urgent action.
Higher US tariffs would inevitably damage corporate profitability and employment across Korea's manufacturing sector. Korea's exports to the US reached $122.9 billion (approximately 182.5 trillion won) last year. Based on this figure, raising tariffs from 15% to 25% would impose additional costs of 18 trillion won, with small and medium enterprises bearing roughly 2.7 trillion won. SMEs face disproportionate harm due to limited pricing power, difficulty passing on tariff costs, and challenges diversifying export markets.
The special committee's mandate expires on the 9th. If the bill is not approved by then, another crisis awaits. The pledge to pass the legislation at the June 12 plenary session must not be delayed any further.
