As the Donald Trump administration has launched investigations into 16 countries including South Korea as a preliminary procedure for invoking Section 301 of the Trade Act, the Korean government has submitted an official opinion letter addressing issues raised by the U.S., including manufacturing overcapacity. In the letter submitted to the U.S. Trade Representative (USTR) on the 15th, the government explained point by point that the Korean economy operates based on market principles and that manufacturing facility utilization rates are determined by market demand rather than artificial intervention. The USTR plans to decide whether to apply Section 301 based on opinion letters from Korea and other countries, investigation results, and public hearings.
After reciprocal tariffs were suspended following a Federal Supreme Court ruling of unconstitutionality in February, the Trump administration pulled out Section 301 of the Trade Act — a tool for sanctioning unfair trade practices — to restore tariff revenues. U.S. Treasury Secretary Scott Bessent declared that "tariffs at existing levels could be reimposed as early as early July." The problem is that the possibility cannot be ruled out that, in the process of establishing a new tariff regime, the U.S. may retaliate against countries that declined President Trump's request to dispatch troops for the Iran war. Trump warned key ally Britain the same day, saying it "wasn't there when needed" and that while he had "provided a better trade agreement than necessary [last year], it can be changed at any time." Korea, which Trump specifically singled out as having "not helped the U.S.," also faces difficulty gauging what kind of "grudge" it will confront.
As the second round of U.S.-Iran ceasefire negotiations takes shape, Trump said, "The war seems to be almost over." While the world would welcome an end to the war, this also means that Trump's attention, which had been focused on the Middle East, could shift to tariffs. Armed with Section 301 of the Trade Act, which has no upper limit on tariff rates, Trump could start another war. Korea's economy, already hit by war-related impacts such as supply chain instability, must thoroughly prepare for Trump's "post-war bill" so it does not also suffer a tariff bombshell. Korea must find a breakthrough through "win-win" solutions with the U.S., such as accelerating the selection and implementation of the top U.S. investment project and expanding imports of American energy for supply chain diversification. The first test will be the meeting on the 17th between Deputy Prime Minister and Finance Minister Koo Yun-cheol and Secretary Bessent.
