Section 301 Targets Korea's Five Key Manufacturing Sectors... Government and Corporate "One Team" Response Strategy

"Reflecting Requests Made to the U.S. Including Submarine Construction"

"Demonstrating Commitment to Participate in U.S. Manufacturing Revitalization Is Key"

"Expressing Willingness to Address Excess Capacity Issues Is Essential"

The Office of the United States Trade Representative (USTR) has announced a sweeping investigation under Section 301 of the Trade Act, directly targeting Korea's core export items in the manufacturing sector. Trade experts have diagnosed this investigation as an unprecedentedly strong pressure tactic that goes beyond the existing tariff system, constituting a major crisis for Korea's entire manufacturing production system. In particular, the risk factor lies in the possibility of "country-specific differential sanctions," where only Korea is subjected to unfavorable conditions compared to competing countries such as Japan or the European Union (EU). Therefore, it is pointed out that the government and companies must form a united front to highlight Korea’s contribution to investment in the United States and proactively respond by emphasizing the logic of voluntary restructuring for sensitive items such as petrochemicals and steel.

On March 13, trade experts assessed that the Section 301 measures are intended as a tool to pressure investment in the United States, replacing country-specific reciprocal tariffs. It is expected that, similar to the reciprocal tariffs announced by the Donald Trump administration last year, negotiations will proceed on a country-by-country basis. There is also an analysis that tariff pressure may be applied at levels even higher than previously announced tariffs.

Shin Wonkyu, Senior Research Fellow at the Korea Economic Research Institute, stated, "This Section 301 has no upper tariff limit and is targeting Korea’s key export items with a trade surplus to the United States. Therefore, it could bring even greater uncertainty and impact than the previous reciprocal tariff of 25% or the subsequently agreed 15% tariff." He added, "Not only tariffs, but also various forms of sanctions such as operational and import restrictions, or measures similar to the recent shipping fee imposed on Chinese-flagged vessels, could be expanded."

Experts are paying attention to the possibility that Section 301 of the Trade Act could be applied differently by country, similar to previous reciprocal tariffs. Professor Heo Yoon of the Graduate School of International Studies at Sogang University diagnosed, "Each country is likely to be investigated based on an outline of which items and what level of tariffs to secure," suggesting that a different pattern from past tariff policies may emerge.

Kim Taehwang, Professor of International Trade at Myongji University, also explained, "Section 301 may be applied differentially to 16 countries," and "If Korea receives unfavorable treatment compared to countries like Japan or the EU, which compete in the U.S. market, it will be a significant challenge for us."

Accordingly, experts stressed the need for the government and companies to jointly organize industry data and actively explain Korea’s investment status to the U.S. side. Before imposing tariffs, the USTR is expected to hold a public hearing and solicit opinions.

Professor Kim said, "Since there is a procedure to hear the other country's opinions during the Section 301 investigation, it is important for the government and companies to prepare response materials together." He added, "In this process, issues such as submarine construction, nuclear power plant investment, and waste management that Korea has requested from the United States must be thoroughly reflected and not omitted."

Reuters Yonhap News

There was also advice that sufficient explanations are needed for sectors such as petrochemicals and steel, which could be diagnosed as having excessive capacity. Professor Heo explained, "The petrochemical industry is in a declining phase of its cycle, so it lacks competitiveness and has been trying to restructure, which inevitably means there may be oversupply and overcapacity. As for steel, globally, it has been structurally overcapacity for the past 50 years."

He went on to emphasize, "Our core items are already being invested in the United States. It is crucial for the government and companies to act as a united team to demonstrate that Korea’s exports to the U.S. are not being routed through China, that Korea is already carrying out internal restructuring for overcapacity, and that we are willing to actively invest in U.S. manufacturing revitalization, defense industry infrastructure, shipbuilding, nuclear energy, and related Korea-U.S. investment projects going forward."

Mr. Shin also added, "The more sensitive the issue, the more important it is to improve mutual understanding through close communication and consultation between the two countries." He continued, "Korea’s message should not be limited to 'investment implementation.' It should also highlight the market-friendliness of recent voluntary restructuring in the petrochemical industry and emphasize the creation of production, procurement, and employment in the United States through Korean investment, building a persuasive argument that 'the excess capacity issue is not being aggravated.'"

This content was produced with the assistance of AI translation services.