Jamieson Greer, United States Trade Representative. [Reuters]
Jamieson Greer, United States Trade Representative. [Reuters]

The Office of the United States Trade Representative announced Tuesday that it plans to impose additional tariffs of 10 percent or 12.5 percent on imports from 60 economies that have failed to prevent trade in goods produced with forced labor.

South Korea was placed in a group of 54 economies that failed both to enact import bans on forced-labor goods and to enforce such measures effectively, making it subject to the 12.5 percent rate.

Other economies in the same group include Australia, Brazil, China, Japan, Norway, Russia, Saudi Arabia, Singapore, Switzerland, Taiwan, Thailand, Turkey, the United Kingdom and Vietnam, among others under investigation.

A lower rate of 10 percent was proposed for six economies — Canada, Ecuador, the EU, Indonesia, Mexico and Pakistan — that have either implemented import bans, committed to doing so, or partially adopted related regimes.

The USTR said it had determined that the policies and practices of the 60 economies regarding trade in forced-labor goods "are unreasonable and burden or restrict US commerce."

The USTR launched the investigation in March under Section 301 of the Trade Act to replace the reciprocal tariffs that the US Supreme Court struck down as unlawful in February.

The probes — covering both "overcapacity" and "imports of goods produced with forced labor" — are intended to pave the way for imposing additional tariffs on the economies under investigation. South Korea is included in both inquiries.

Section 301 of the Trade Act grants the administration authority to respond to unfair foreign government policies and practices through measures including tariffs.

After the reciprocal tariffs were struck down, the Trump administration imposed a 10 percent so-called "global tariff" on all trading partners on Feb. 20 under Section 122 of the Trade Act.

The Trump administration is using the global tariff as a stopgap until a new tariff framework based on the Section 301 investigations formally replaces the original reciprocal tariffs. The global tariff can remain in effect for only 150 days — through July 24 — so the administration is moving quickly to finalize the Section 301-based replacement before that deadline.

Last year, South Korea secured a reduction of the threatened 25 percent reciprocal tariff to 15 percent by pledging $350 billion in investment in the United States through bilateral tariff negotiations. The country is currently subject to the temporary 10 percent global tariff, as are other trading partners.

The USTR plans to finalize the proposed measures stemming from the forced-labor investigation after a public comment period that includes a hearing scheduled for July 7.

"It is unacceptable that many of our most important trading partners have failed to address the importation of goods made with forced labor, which forces American workers to compete on an uneven playing field around the world," USTR Jamieson Greer said in a statement. "We will no longer tolerate these imbalances."

If the 12.5 percent tariff based on the forced-labor investigation is finalized, it would come close to the existing 15 percent reciprocal tariff South Korea negotiated with the United States.

Beyond the forced-labor investigation concluded in this round, the United States is expected to announce plans for additional tariffs through a separate probe into overcapacity.

If South Korea were required to pay an additional 5 percent tariff over overcapacity, the total Section 301-based tariff applied to South Korea would reach 17.5 percent — 12.5 percent plus 5 percent — exceeding the existing 15 percent reciprocal tariff.

The South Korean government is therefore communicating with Washington on the basis that the total additional tariffs the United States seeks to impose through Section 301 should not exceed 15 percent, given the bilateral trade agreement reached on the strength of Seoul's large-scale investment pledges.

Trade, Industry and Energy Minister Kim Jung-kwan told reporters recently that he understood the purpose of the Section 301 investigation targeting South Korea and others to be "restoring the 15 percent" reciprocal tariff that was struck down, adding that the resulting US measures would "likely fall within that range — we will do our utmost to ensure they do."


dandy@heraldcorp.com