How to Obtain Section 301 Tariff 'Exemptions and Exceptions' in the U.S.? Companies Need 'Tailored Response Strategies'

KERI's Report on Responding to Section 301 of the Trade Act
Section 301 Investigation: Opinion Submission Open Until April 15
Emphasis on Industry-Specific Supply Adjustment and Market Restructuring
Exception Applications Should Be Filed Through U.S. Local Companies or Organizations

In response to the U.S. Trump administration's moves related to Section 301 trade investigations and tariff impositions, an analysis suggests that Korean companies should strategically utilize both "pre-emptive tariff exemptions" and "post-imposition exceptions" provided by the U.S. government. Since there is room for such exemptions and exceptions, it is advised that companies thoroughly analyze the supply chain structure and industrial impact of each item in the United States and actively respond both before and after the public hearings.

According to the Korea Economic Research Institute on April 14, the institute recently addressed this issue in a report by Senior Research Fellow Wonkyu Shin titled "Status and Response Direction of Trade Act Section 301 under the Second Trump Administration." The report emphasized that a dual-track response targeting both pre-emptive exemptions before the imposition of tariffs and post-imposition exceptions is necessary.

Report titled "Status and Response Direction of Section 301 Trade Law under Trump’s Second Term" by Won-gyu Shin, Senior Research Fellow at the Korea Economic Research Institute. The Korea Economic Research Institute.

The report recommends that companies make the most of the period for submitting opinions, which ends on April 15, and the public hearings scheduled for May 5–8 as the "main channels for designing pre-emptive exemptions or exceptions (buffers)." The Office of the United States Trade Representative (USTR) is currently accepting submissions of opinions and requests to participate in the hearings regarding the Section 301 investigation via its official website until midnight on April 15.

Senior Research Fellow Shin diagnosed that the rationale behind this U.S. investigation is focused less on "trade surplus" itself, and more on the argument that overcapacity and overproduction undermine U.S. reshoring and investment. Accordingly, he suggested that Korea’s message should emphasize not only “expanding investment,” but also efforts to adjust supply and demand by industry and to restructure market bases. He pointed out the importance of systematically presenting evidence of the effects of Korean investments in the U.S. on local production, procurement, and job creation, thereby establishing the argument that the relevant items do not worsen the issue of overcapacity in the U.S.

It was further suggested that the government could utilize Korea-U.S. trade consultation channels to highlight efforts such as supply structure adjustments like petrochemical industry restructuring, investment outcomes in the U.S., and frameworks of industry cooperation. Since the petrochemical industry is being considered as the first major project for investment in the U.S., it could be linked to this investigation and strategically leveraged.

The analysis also states that efforts to obtain exceptions must continue even after tariffs are imposed. Previously, during the first Trump administration, the USTR established an "exception application system" alongside the Section 301 tariffs.

This system does not have fixed review criteria. However, in the past, the USTR has considered certain key factors when accepting applications: (1) cases where alternative domestic supply in the U.S. is impossible or limited in the medium or short term; (2) cases where increased final consumer prices would directly raise consumer burdens; and (3) cases where the targeted items are essential for maintaining U.S. strategic industries (such as advanced industries, telecommunications, or energy).

Report on 'Status and Response Strategies for the Enforcement of Section 301 Trade Law in Trump’s Second Term' by Won-Kyu Shin, Senior Research Fellow at Korea Economic Research Institute. KERI.

In fact, during the first Trump administration’s imposition of tariffs on Chinese goods, many of the items granted exceptions were related to manufacturing facilities. For example, "roller machines and dies" were exempted because tariffs would increase manufacturing costs and burden small businesses. "Cured rubber tracks for construction equipment" were exempted due to the difficulty of finding alternatives in the supply chain. For "automatic data processing storage devices," the application was accepted because tariffs would increase the operational burden on data centers.

Additionally, past cases show that the results of such investigations could be used not only for tariffs but also for non-tariff measures, so companies should not be complacent after the public hearings. The report explains that even after decisions are finalized, the measures can be strengthened through amendments. As seen in the 2019 French digital tax case and the 2024 investigations into China’s shipping, logistics, and shipbuilding industries under Section 301, new criteria may be applied or subsequent amendment hearings held, making this a long-term, ongoing source of pressure.

Based on these cases, the report stresses that Korean companies should meticulously analyze the supply chain structure and industry impact of each item in the U.S. and develop tailored response strategies. It especially advises that exception applications should be submitted through local companies or corporations in the U.S.

Senior Research Fellow Shin stated, “Given that these measures are intended to induce production and investment in the U.S., it is effective to submit exception applications through U.S. companies (or local subsidiaries) or concrete organizations and to support the arguments with quantitative data on the economic and security significance of Korean export items, price competitiveness and productivity for U.S. companies, and their contribution to job creation.”

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