Korea trade body urges US to delay or cut forced-labor tariff

The Korea International Trade Association has formally asked the Donald Trump administration to suspend or reduce a proposed 12.5 percent additional tariff tied to forced labor. If the levy is finalized and a separate surcharge on overproduction follows, the effective US tariff rate on Korean goods could exceed the existing 15 percent reciprocal tariff.

KITA submitted comments to the US Trade Representative on Monday under the name of Chairman Yoon Jin-sik, asking the USTR to reconsider the 12.5 percent additional tariff on Korean products — and, if an outright suspension is not possible, to lower the rate to 10 percent.

"It is difficult to demonstrate specific cases or a causal relationship showing that particular Korean products, made using raw materials produced by forced labor, have caused significant harm to US companies," KITA said in the filing. "Imposing sweeping additional tariffs solely on the grounds that there is no formal ban on forced-labor imports does not serve the economic interests or industrial competitiveness of either the United States or Korea."

The association also noted that South Korea has ratified relevant international treaties and strictly prohibits forced labor under domestic law, and that many Korean companies maintain internal policies and codes of conduct banning trade in goods linked to forced labor.

KITA further argued that Korean companies' expanding investment in the United States has contributed to strengthening the US manufacturing base, job creation and supply chain stability. It added that imposing additional tariffs on Korean intermediate goods used in US production could instead disrupt supply chains.

The association also requested that products with a low risk of forced-labor involvement, those lacking concrete evidence of significant harm to US commerce, and goods from companies with rigorous internal forced-labor compliance policies be excluded from the tariff's scope.

KITA's request for a 10 percent rate reflects the USTR's own stated position that countries already enforcing or committed to enforcing a ban on forced-labor imports would face a lower additional tariff of 10 percent rather than 12.5 percent.

The Trump administration has imposed a 10 percent so-called global tariff on trading partners worldwide under Section 122 of the Trade Act since the Supreme Court struck down the reciprocal tariffs in February. However, tariffs under Section 122 can remain in place for a maximum of 150 days, and the administration is now moving to introduce a new tariff framework under Section 301 of the Trade Act before the Section 122 levies expire later this month.

Section 301 allows the administration to impose tariffs and other retaliatory measures against foreign government policies or practices deemed unfair or unreasonable that restrict or burden US trade. The USTR launched Section 301 investigations in March citing overproduction and forced labor, and South Korea was included in both probes.

Last month, the USTR announced the results of its forced-labor investigation, saying it would impose additional tariffs of either 10 percent or 12.5 percent on imports from 60 economies that failed to prevent trade in goods produced by forced labor. The South Korean government is set to attend a USTR public hearing in Washington on Thursday to present its position.

Market observers worry that if the 12.5 percent forced-labor tariff is finalized and a further surcharge from the overproduction investigation is added, the effective US tariff rate on Korean goods could surpass the existing 15 percent reciprocal tariff.