Opening Fire in Trump-Led Tariff War: Surge in Consulting for Law Firms' Trade and Tax Teams

U.S. President Donald Trump has initiated the tariff imposition process on Mexico, Canada, and China, marking the official start of the "Trump-led tariff war." Although the implementation of tariffs on Mexico and Canada has been postponed for one month, 201 domestic large corporation affiliates operating in Mexico and Canada must prepare immediately.

While Korea was not included in the first round of targets, the escalation of the tariff war raises a high possibility that Korea will be directly targeted in the future. In response, law firms are offering immediate countermeasures upon corporate consultation requests and are recruiting experts in trade and international taxation.

Donald Trump. Photo by EPA Yonhap News

201 Large Corporation Affiliates in Mexico and Canada

According to the Korea CXO Institute, a corporate analysis specialist, as of the 4th, among 88 domestic large business groups (designated by the Fair Trade Commission), 25 groups have established and operate 201 overseas affiliates in Mexico and Canada. There are 110 affiliates in Canada and 91 in Mexico.

Looking simply at the number of overseas affiliates by group operating in Mexico and Canada, Samsung had the most with 68. Samsung has 18 companies in Mexico and 50 in Canada. Next was Hyundai Motor Group with 28 (16 in Mexico, 12 in Canada), followed by Hanwha (14), LG (11), and POSCO (11).

Oilseon Oh, director of the Korea CXO Institute, analyzed, "Among major domestic large corporations with manufacturing plants in Mexico and Canada, product groups related to batteries, home appliances, and automobiles are highly likely to suffer damage to their export competitiveness to the U.S. due to the tariff bomb."

Since President Trump’s election in November last year, domestic companies have been continuously consulting law firms’ trade and international tax teams regarding the impact and issues of U.S. tariffs. Companies mainly inquired about ways to alleviate burdens in situations where additional tax liabilities might arise.

Recently, consultations have increased regarding how to interpret the U.S. government's tariff imposition on Mexico, Canada, and China. There were also inquiries about the interpretation of the International Emergency Economic Powers Act (IEEPA), which President Trump cited as the basis for the tariffs, as well as questions about the necessity of supply chain changes.

IEEPA is a law that grants the U.S. president authority to take emergency economic measures in crisis situations. It can be seen as a measure similar to the emergency measures stipulated in Article 76, Paragraph 1 of the Korean Constitution. It is characterized by granting the president broad authority to regulate or prohibit economic transactions with foreign countries when a national emergency is declared based on threats to national security.

President Trump imposed tariffs on Mexico, Canada, and China based on IEEPA, arguing that illegal immigrants and fentanyl and other narcotics pose a serious threat to U.S. citizens and that these countries are neglecting to prevent their inflow.

Park Tae-ho, director of the International Trade Research Institute at the law firm Kwangjang and former head of the Trade Negotiation Office at the Ministry of Foreign Affairs and Trade, said, "President Trump’s use of the national emergency declaration and IEEPA is legally valid under U.S. domestic law. Although the affected countries can file complaints with the WTO, they cannot prevent additional tariff impositions. It may be a negotiation tactic targeting countries with trade surpluses in the current U.S. trade market, so it is necessary to monitor the situation and prepare countermeasures such as supply chain changes."

Park Hyo-min (43, Judicial Research and Training Institute class 41), vice president of the Korea Trade Information Society and attorney at Sejong, explained, "Previously, tariffs were mainly imposed based on the Trade Expansion Act or the Trade Act, but the imposition of tariffs through IEEPA is significantly different in that it allows broad tariffs on entire specific countries. Although there is potential for legal controversy, it is unlikely that U.S. courts will overturn the president’s decision." He added, "It cannot be ruled out that the U.S. may impose tariffs on Korea in the future based on IEEPA."

Han Chang-wan (45, class 35), attorney at Taepyungyang Global Future Strategy Center and former head of the International Dispute Response Division at the Ministry of Justice, said, "Despite voices questioning whether IEEPA can be the basis, the fact that tariffs were imposed based on it means that it is difficult to rule out the possibility that the U.S. government will unilaterally impose tariffs on Korea based on the same law in the future."

Additionally, companies are consulting law firms on △ ways to alleviate tax burdens due to the implementation of the global minimum tax △ the scope of new international taxation, among other issues.

Team Expansion, Seminars, and Frequent Newsletters

Law firms anticipate continued changes in trade and international tax trends and are expanding their international tax teams and international trade-related teams.

Kim & Chang law firm operates the new International Tax Research Institute (RCIT), which develops and provides advisory services to companies, in addition to its existing international tax litigation and tax audit teams. Since November last year, Kim & Chang’s international trade team has formed the "Trump 2nd Term Trade Regulation Response Task Force" together with the environment and energy team, export control team, economic sanctions team, supply chain team, and HR team.

Kwangjang was the first domestic law firm in 2023 to launch an Economic Security Task Force handling economic security affairs. The Kwangjang International Trade Research Institute collaborates with think tanks in Washington and Brussels to provide policy and economic analyses. It plans to hold seminars or webinars with U.S. law firms in the first half of this year on topics such as the TCJA extension.

Taepyungyang recently recruited Jeremy Everett, the first foreigner to serve as head of global tax for a domestic large corporation, to respond to changes in tax policy. They are also planning a seminar titled "Changes in U.S. Tax Policy and Global Corporate Response Strategies."

Yulchon launched the "Trump 2.0 Response Center" early this year to proactively prepare industrial countermeasures for Korean companies in line with policy changes of the Trump administration. The center is led by attorneys Ahn Jeong-hye (49, class 35) and Choi Yong-hwan (47, class 36). Experts from Yulchon’s legislative support team, IRA-Chips Act response center, and international arbitration team collaborate within the center, analyzing the impact of Trump administration policies on domestic companies and providing this information to clients. Last month, in cooperation with the Korea Battery Industry Association, they held the "Trump 2.0 Battery Policy Response Seminar," discussing policy trends related to IRA policies, general tariffs, tax cuts, and technology controls.

Sejong is monitoring the latest trends in international taxation and analyzing international tax laws and precedents through the International Tax Research Institute established in 2023. The Global Business Strategy Center held a seminar on the 24th of last month titled "Changes in China’s External Strategy Following Trump’s Re-election and Korean Companies’ Response Strategies," jointly with the China team.

HwaWoo held a comprehensive seminar on Trump policy response measures on the 4th. Topics included U.S. trade and investment, export control policies, and corporate responses.

Han Su-hyun, Legal Times Reporter

※This article was written based on content provided by Legal Times.

※This article is based on content supplied by Law Times.

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