Starting today, July 24, the United States has begun applying a 12.5% forced-labor tariff on Korean goods, replacing the 10% global tariff that had been in place, Korean investment blogger Meru writes, meaning Korea's overall tariff burden is now higher, not lower. The backstory: in February, the US Supreme Court ruled the Trump administration's reciprocal (IEEPA) tariffs illegal, so the White House invoked Trade Act Section 122 to impose a temporary 10% global tariff, capped at 150 days and set to expire on July 24. The replacement is a tariff tied to whether a country bans imports made with forced labor. Washington reviewed 60 economies covering 99.4% of US imports, and found 54 of them, including Korea, either have no such ban or don't enforce one. The rate combines each country's existing most-favored-nation (MFN) tariff with the new levy, capped at 12.5% combined, so goods with 0% MFN like cosmetics take the full 12.5%, while goods already above that threshold, like men's shirts at 20% MFN, get no add-on. The catch is that Switzerland, Taiwan, and the EU negotiated extra country-specific exemptions, while Korea and Japan did not make that list. Semiconductors remain tariff-free under a separate US-Korea agreement. Citing the Atlantic Council, Meru estimates this adds roughly $4.3 billion a year in new tariffs on Korean imports, and with no clear countermeasure in sight, coordinating with Japan, which faces the same situation, looks like the most realistic option.
Why it matters · This isn't a tariff cut, it's the same burden relabeled under a new legal justification, and the fact that Switzerland, Taiwan, and the EU negotiated extra exemptions while Korea and Japan didn't is a quiet, multi-billion-dollar cost stacking up on Korean exporters every year.
Worth asking · Korea could shave 2.5 percentage points off this tariff, from 12.5% down to 10%, by adopting its own forced-labor import ban, but doing so would invite deeper US scrutiny into supply chains with Xinjiang ties. Is a 2.5-point cut worth that exposure?