Korea Must Leverage US Investment Law Against Section 301 Tariff Offensive

The Donald Trump administration announced on the 12th that it will officially launch Section 301 trade law investigations—a procedure for imposing additional tariffs—against 16 countries including Korea, China, and Japan. Following the Supreme Court's ruling last month invalidating reciprocal tariffs, the administration appears to be resuming tariff pressure in earnest by introducing alternative legislation. The US Trade Representative (USTR) stated in the Federal Register that "Korea maintains trade surpluses in electronic equipment, automobiles and auto parts, machinery, steel, and ships." The USTR indicated it may also conduct additional investigations into digital services, pharmaceuticals, market access for rice and seafood, and environmental pollution—not just manufacturing. The USTR emphasized that all related measures would be completed before the July 24 expiration date of the 10% tariffs imposed under Section 122 of the Trade Act.

The United States pulling out the Section 301 card amid its confrontation with Iran clearly signals its intent to tighten the "tariff reins" without exception, even for economic and security allies. While China, its rival in the struggle for economic hegemony, is the primary target, Korea cannot rest easy given its substantial trade surplus with the US. In 2024, Korea's exports to the US ($127.8 billion) and trade surplus ($55.7 billion) both reached all-time highs. Last year's trade surplus ($49.5 billion) declined slightly from the previous year but continues to maintain a significant surplus trend. This marks the 28th consecutive year of surplus since 1998. The possibility cannot be ruled out that the United States, which has declared reducing trade deficits as the top priority of its MAGA policy, will take direct aim at Korea using the trade surplus as justification.

Negotiations with the US over the next four months will be a "tariff watershed." Above all, it is crucial to use the Special US Investment Law passed by the National Assembly as a "negotiating lever" to highlight the practical benefits of economic cooperation to the United States. Korea's government must also adequately inform the US of its swiftly progressing restructuring efforts in petrochemicals and steel to dispel concerns about overproduction.

What the ruling party and government must guard against most is unfounded confidence that additional tariffs will not exceed the reciprocal tariff levels originally imposed by the United States. The government should establish a cross-ministerial task force to develop a multilayered negotiation strategy encompassing manufacturing, digital and platform industries, and agricultural products. For digital services and agricultural products, Korea must prepare comprehensive countermeasures invoking the principle of proportionality with competing nations such as the European Union and Japan to ensure national interests are not compromised.