Seoul: The US Supreme Court on Friday struck down the Trump administration's reciprocal tariffs under the International Emergency Economic Powers Act as unlawful. The decision effectively dismantles the legal basis for the "reciprocal" tariffs the US has been imposing on countries worldwide since last April.
According to Yonhap News Agency, this development has not alleviated concerns, as uncertainty deepens over the US tariffs and the trade agreements the United States secured in exchange for tariff reductions. In response, President Trump quickly implemented a contingency plan by imposing a 10 percent "global tariff," which he announced would be increased to the statutory maximum of 15 percent the following day.
This move marks the first invocation of Section 122 of the Trade Act as the legal foundation for these global tariffs. Additionally, President Trump has hinted at other legal measures, including Sections 232 of the Trade Expansion Act, Section 301 of the Trade Act, and Section 338 of the Tariff Act. The global tariff can remain in effect for up to 150 days without congressional approval, during which time the administration could impose even steeper duties citing unfair trade practices, harm to domestic industries, or national security concerns.
Trump's administration is determined to maintain its high-tariff strategy, utilizing nearly every trade tool available. In exchange for reducing the reciprocal tariff from 25 percent to 15 percent, South Korea pledged to invest $350 billion in the United States over the next decade. However, with the reciprocal tariff now invalidated, the newly imposed 15 percent global tariff means there is no change to the tariffs applied to South Korea.
Despite the shift in the legal foundation of US tariffs, the intensity of trade pressure and tariff risks remains largely unchanged, and uncertainty has only intensified. The Trump administration may raise product-specific tariffs as an alternative to reciprocal tariffs, potentially impacting industries heavily reliant on US exports, such as automobiles and semiconductors.
If South Korea seeks to renegotiate its commitments or fails to fulfill its US investment pledges, Trump may impose retaliatory tariffs or escalate trade pressure as a cautionary measure. The Seoul-Washington trade agreement is intertwined with South Korea's critical diplomatic and security priorities, including acquiring nuclear-powered submarines and the ability to enrich and reprocess uranium.
Amid the complex interplay of trade and security concerns, and considering Trump's unpredictable approach, the South Korean government must proceed cautiously. Cheong Wa Dae has reiterated its commitment to maintaining close consultations with the US to ensure the $350 billion investment continues without disruption.
Nevertheless, South Korea remains at risk of being targeted by heavy tariffs, especially as the US Trade Representative continues to express concerns over South Korea's nontariff barriers and "discriminatory" measures. To avoid being caught off guard, South Korea must closely monitor US tariff developments and maintain continuous consultations to guard against unexpected duties.