US Trade Probe South Korea Surplus Pressure

The United States has initiated a comprehensive trade investigation targeting 16 key trading partners, including South Korea, China, and Japan. This move signals a potential increase in tariffs as the current administration aims to reinstate duties recently overturned by the US Supreme Court.

US Trade Representative Jamieson Greer announced on Wednesday that his office would commence an inquiry under Section 301 of the 1974 Trade Act. This legal instrument empowers Washington to scrutinize foreign trade practices considered unfair and, based on the findings, impose tariffs or other trade restrictions.

The investigation, which may span several months, encompasses some of the US’s largest trading partners, including Bangladesh, Cambodia, China, the EU, Indonesia, Japan, Malaysia, Norway, Singapore, South Korea, Switzerland, Thailand, Taiwan, and Vietnam.

“These investigations will concentrate on economies where we have evidence of structural excess capacity and production in various manufacturing sectors, evidenced by persistent trade surpluses or underutilized capacity,” Greer told reporters during a conference call on Wednesday.

This investigation represents a step by the current administration to revive its tariff framework, following a recent Supreme Court ruling that invalidated “reciprocal tariffs” imposed on nearly all trading partners under the 1977 International Emergency Economic Powers Act.

Tariffs remain a cornerstone of the current administration’s trade policy, and the US president has pledged to explore alternative legal avenues to maintain them.

Following the Supreme Court’s decision, the administration invoked Section 122 of the Trade Act of 1974 to impose a temporary 10 percent tariff on imports from all trading partners, a measure scheduled to expire in July.

The newly launched Section 301 investigation is widely perceived as an effort to establish a more sustainable legal foundation for tariffs that could eventually replace the temporary duties. Section 301 was previously utilized during the administration’s first term to justify substantial tariffs on Chinese imports, many of which remain in effect today.

In a notice published in the Federal Register, the USTR stated that South Korea exhibits signs of structural excess capacity and production, reflected in significant and persistent trade surpluses.

“Korea maintains a global goods trade surplus, driven by exports in sectors such as electronic equipment, automobiles and auto parts, machinery, steel, and ships and marine vessels,” the notice stated. “Korea’s bilateral goods and services trade surplus with the United States increased to $56 billion over the course of 2024, and remained around $49 billion over the four quarters through June 2025.”

The notice also highlighted the South Korean government’s acknowledgment of the need to reduce capacity in the petrochemicals sector.

While the direct impact on South Korea may be limited, certain sectors could face heightened scrutiny.

“Steel and petrochemicals are more likely to be targeted due to their association with global oversupply,” said Jang Sang-sik, head of the International Trade and Commerce Institute at the Korea International Trade Association. “Shipbuilding, electronics, and automobiles may offer greater room for negotiation, considering Korean companies’ significant investments in the US.”

On Wednesday, South Korea’s presidential office affirmed its intention to “actively consult” with the US to ensure that the “balance of interests secured in the existing S.Korea-US tariff deal is not undermined, and that South Korea does not receive treatment less favorable than other major countries.”

Trade experts suggest that tariffs in the vicinity of 15 percent, similar to the reciprocal tariffs previously applied to South Korea, could be implemented under Section 301.

South Korea’s Industry Ministry confirmed that it had received a formal consultation request from the USTR – a procedural step in the investigation – and intends to submit an official position after gathering industry feedback.

“The deadline for written submission is April 15, and we plan to coordinate closely with industry before submitting the government’s official opinion,” a senior industry ministry official stated, adding that several public hearings will be held in May, to which the government will actively respond.

When questioned about the possibility of additional Section 301 investigations targeting issues such as discriminatory treatment of US companies and digital goods and services, the ministry indicated that it was difficult to predict.

“At this stage, the focus appears to be on restoring tariffs that were invalidated by the Supreme Court,” the official explained. “The USTR could pursue additional Section 301 consultation with other trading partners later, but nothing beyond the current investigations has been formally confirmed.”

Analysts caution that the specific sectors or policies the US will ultimately target remain uncertain, as the term “various manufacturing sectors” is broad and could potentially encompass more sensitive areas such as digital regulations and non-tariff barriers.

“For now, it is not clear which specific measures or sectors will become issues,” said Lee Jae-min, a professor of law at Seoul National University. “The US and Korea interact across many areas, from digital platforms to non-tariff barriers, which the US has mentioned many times. So a broad range of issues could be examined going forward.”

Lee further noted that Section 301 is legally more robust – albeit structurally slower – than the now-invalidated IEEPA in terms of imposing tariffs.

“The earlier reciprocal tariffs were struck down because they violated provisions of the IEEPA,” he stated. “Section 301 provides a clear legal basis for penalizing what the US considers unfair trade practices and is less vulnerable to legal challenges.”

However, he added that the scope of the probe could prolong the process; the US is simultaneously launching investigations against 16 economies, requiring extensive fact-finding and negotiations.

Jang echoed Lee’s assessment that Section 301 grants Washington broad authority to impose various forms of trade penalties.

“The latest investigation did not include digital issues, but if it is deemed problematic in the future, it could take issue in the future,” said Jang. “If Washington concludes that the current practices are harming US industries, it can deploy a wide range of strong measures, from tariffs and quotas to import restrictions.”

Greer suggested that further investigations could follow in areas of concern, with potential targets including digital services taxes, pharmaceutical pricing policies, market access barriers for rice and seafood, and environmental issues such as marine pollution.

Washington has become increasingly vocal about South Korea’s regulatory policies affecting US digital companies, including platform regulations and recent amendments to South Korea’s telecommunications laws.

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