'Reciprocal' tariffs overturned, leaving door open for alternative US duties
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.
However, this is far from a development to be celebrated. Uncertainty is deepening over US tariffs and the trade agreements the United States secured in exchange for tariff reductions.
Trump promptly put plan B into action. He imposed a 10 percent "global tariff” and, a day later, said he would raise it to the statutory maximum of 15 percent.
Section 122 of the Trade Act, the legal foundation for the global tariffs, has been invoked for the first time.
US President Donald Trump also has alluded to 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 remains in effect for up to 150 days without congressional approval, during which time the Trump administration could impose even steeper duties, citing unfair trade practices, harm to domestic industries or national security concerns.
He stated that over the next few months his administration will determine and issue the new, legally permissible tariffs.
This highlights the Trump administration’s determination to maintain its high-tariff strategy, leveraging nearly every trade tool at its disposal.
In exchange for the US reducing the reciprocal tariff from 25 percent to 15 percent, South Korea committed to investing $350 billion in the United States over the next decade.
Although the 15 percent reciprocal tariff has been invalidated, the newly imposed 15 percent global tariff results in no change to the tariffs applied to South Korea.
Tariffs on its key exports, including automobiles and steel, remain in place, as they are governed by product-specific duties under the Trade Expansion Act.
Although the legal foundation of US tariffs has shifted, the intensity of trade pressure and tariff risks remains largely unchanged.
Uncertainty has only intensified.
Since the Trump administration may raise product-specific tariffs as an alternative to reciprocal tariffs, industries highly dependent on exports to the US, such as automobiles and semiconductors, could face greater losses. South Korea must brace for the possibility that US reciprocal tariffs could be replaced with other forms of high-rate duties.
If Seoul were to seek renegotiation with Washington or fail to fulfill its US investment commitments on the grounds that reciprocal tariffs have been nullified, Trump is likely to impose retaliatory tariffs or escalate trade pressure on South Korea as a cautionary measure.
He could reverse course at any time if an agreement fails to meet his expectations — and allies are not exempt.
Above all, the Seoul-Washington trade agreement is closely linked to South Korea’s key diplomatic and security priorities, including the acquisition of nuclear-powered submarines and the ability to enrich and reprocess uranium.
Amid the intricate interplay of trade and security concerns — and in light of Trump’s unpredictable approach — the South Korean government must avoid hasty decisions.
Cheong Wa Dae has reaffirmed its commitment to maintaining close consultations with the US and to ensuring the $350 billion investment proceeds without disruption — a prudent and appropriate course of action.
Nevertheless, nothing rules out the possibility of South Korea being singled out as a target of heavy tariffs.
What is worrisome is that the US Trade Representative continues to raise concerns over South Korea’s nontariff barriers and "discriminatory" measures.
South Korea must steer clear of a scenario in which the United States chooses specific countries for trade retaliation, with South Korea among them.
By closely monitoring US tariff developments and maintaining continuous consultations, South Korea must guard against unexpected duties and avoid being caught off guard.
khnews@heraldcorp.com
