12.5% additional tariffs proposed for South Korea and 59 other economies

10% global tariff set to expire in late July

U.S. President Donald Trump. [Reuters]
U.S. President Donald Trump. [Reuters]

The Trump administration has signaled it may impose additional tariffs of 10 percent or 12.5 percent on 60 economies, including South Korea, citing their failure to adequately restrict imports of goods produced with forced labor.

The Office of the United States Trade Representative announced Monday that it plans to levy the additional tariffs on imports from 60 economies that have not properly enforced bans on goods made with forced labor.

The move follows a U.S. Supreme Court ruling in February that found the reciprocal tariffs President Trump imposed on trading partners under the International Emergency Economic Powers Act to be unlawful.

After that ruling, the USTR launched investigations in March under Section 301 of the Trade Act into two practices: structural overcapacity and the importation of goods produced with forced labor.

The proposed tariffs announced Monday stem from the forced-labor investigation. The 54 economies that have neither enacted nor effectively enforced import bans on forced-labor goods would face a 12.5 percent tariff.

South Korea falls into that group. China, Japan, Russia, the United Kingdom, Australia, Brazil and Vietnam were also among the majority of economies under investigation to which the 12.5 percent tariff applies.

Six economies — the EU, Indonesia, Canada, Ecuador, Mexico and Pakistan — would face a lower 10 percent tariff. Those are countries that have enacted import bans, pledged to do so, or have partially put relevant systems in place.

Whether the tariffs are actually imposed will be decided after a public hearing scheduled for July 7 and a broader comment period.

USTR chief Jamieson Greer told CNBC that the administration would put forward proposals on "how to address unfair trade practices like structural overcapacity or forced labor if we find them," adding that tariffs could be one of the tools used.

Following the Supreme Court's ruling against the reciprocal tariffs, the United States introduced a 10 percent "global tariff" on all trading partners, including South Korea, under Section 122 of the Trade Act. That measure is limited to 150 days and is set to expire July 24.

The Trump administration is moving quickly to put Section 301-based tariffs in place before that deadline. Critics say the forced-labor and overcapacity rationales are a pretext for maintaining broad tariff coverage.

South Korea announced $350 billion in planned investment in the United States last year through tariff negotiations with Washington, securing a reduction in the threatened 25 percent reciprocal tariff rate to 15 percent.

Minister of Trade, Industry and Energy Kim Jung-kwan said recently that he understood the Section 301 investigation to be aimed at "restoring the 15 percent" reciprocal tariff rate struck down by the court, and pledged to "make every effort" to ensure any resulting U.S. measures stay within that range.


joze@heraldcorp.com