Korean Media: US Supreme Court Rules "Reciprocal Tariffs" Illegal, South Korea Decides to Continue Its Investment Plan for the US

Although the US Supreme Court put a brake on Trump's "tariff spree," the uncertainty has actually increased. Because President Trump immediately unveiled a new tariff card.

President Trump said on the 21st (local time) through his personal social media that "the 10% global tariff will be raised to the maximum level allowed by law, which has been legally tested, at 15%." Previously, on the 20th, the US Supreme Court ruled that the reciprocal tariff measures imposed by Trump under the International Emergency Economic Powers Act (IEEPA) were illegal.

Although the US Supreme Court limited the tariff war, it is unlikely that Trump will change direction, as he believes there is ample room for maneuver. In fact, after the Supreme Court's ruling, he immediately signed an executive order to impose a 10% "global tariff" on the world. This measure is based on Section 122 of the Trade Act, which is considered a substitute for the original reciprocal tariffs. Subsequently, Trump raised the rate to the legal maximum of 15%. According to Section 122, an executive order can impose tariffs for up to 150 days, and if extended, must be approved by Congress.

For Trump, this at least secured 150 days. He stated that day, "he would decide and announce new, legally permissible tariff measures in the coming months." This means that the tariff card could be used repeatedly. Specifically, Section 301 of the Trade Act and Section 232 of the Trade Expansion Act are considered possible options. Section 301 of the Trade Act allows for retaliatory tariffs after investigating foreign unfair trade practices. After the ruling, US Trade Representative Jamieson Grier also stated that investigations under Section 301 would be initiated against most trading partners.

In addition, Trump may also strengthen "item-specific tariffs." Section 232 of the Trade Expansion Act allows for tariffs to be imposed when certain imported products are deemed a threat to national security. Most of South Korea's major export products fall within the scope of item-specific tariffs. Park Won, head of the Economic Research Division at the Hyundai Economic Research Institute, said, "If it enters the stage of expanding item-specific tariffs, the losses may be greater than those from reciprocal tariffs."

Some views also see a positive side. Previously, the US had pressured South Korea to delay its investment in the US by threatening to raise tariffs back to 25%. With the illegal ruling, this pressure has temporarily eased. South Korea originally planned to invest 350 billion USD (about 507 trillion KRW) in the US, but because the reciprocal tariffs themselves were ruled invalid, some interpretations suggest that related investment agreements might also become invalid. However, the South Korean government decided to proceed with the investment plan as originally scheduled. On the 21st, Kim Seong-ro, Director of the National Security Office, and Kim Young-bum, Director of the Policy Office, held a meeting with relevant departments on US-South Korea economic and trade affairs, deciding to continue the investment plan. This is because the investment is related to strategic cooperation projects between the two countries, such as shipbuilding and nuclear-powered submarines. The Special Committee on US Investment in the National Assembly will also hold a legislative hearing on the 24th to advance the process of enacting a special law.

A former trade official said, "Since this is an internal US issue, South Korea does not need to rush or act prematurely." He also pointed out, "From another perspective, before the midterm elections, Trump's pressure may become stronger, so it must be carefully and strategically dealt with."

Source: JoongAng Daily

Original: toutiao.com/article/1857912049241100/

Statement: This article represents the views of the author alone.