Minister of Industry: "Investment in the U.S. is to manage tariff pressure... 15% ceiling reconfirmed"

Minister of Industry: "Investment in the U.S. is to manage tariff pressure... 15% ceiling reconfirmed"

Dismisses concerns that additional U.S. 'overproduction tariffs' would exceed 15%

"U.S. trade relations are a continuous process of overcoming challenges"... additional semiconductor investment excluded from discussions

As the announcement of additional tariffs by the Donald Trump administration in the U.S. approaches, it has been revealed that trade authorities have confirmed with the U.S. side that the existing tariff agreement line of 15% will not be exceeded.

According to trade authorities on the 1st, Minister of Trade, Industry and Energy Kim Jung-kwan stated in a recent background briefing regarding U.S. investment negotiations held at the Government Seoul Complex, "It was not appropriate to directly specify tariffs in the U.S. investment project agreement, so it was unfortunately omitted," but added, "The U.S. side has stated its position to maintain the tariff rate at the 15% level, whether through Section 301 of the Trade Act or any other form."

This dismisses concerns that the U.S. tariff rate could exceed the 15% ceiling based on the results of the U.S. Trade Act Section 301 overproduction investigation.

Since the Federal Supreme Court's ruling invalidating reciprocal tariffs in February, the Trump administration has restructured its tariff policy using Section 301 of the Trade Act, among others.

In March, the U.S. Trade Representative (USTR) initiated investigations into overproduction and forced labor against 16 economic blocs, including China, South Korea, the European Union (EU), Japan, and India, based on Section 301 of the Trade Act.

Subsequently, in July, new forced labor tariffs of 10-12.5% were imposed on 60 economic blocs, including South Korea and China. A 12.5% tariff was applied to South Korea.

Concerns were raised that if additional tariffs resulting from the overproduction investigation, to be announced soon, are imposed, the tariff rate on South Korean products could exceed the 15% level agreed upon by South Korea and the U.S. last year.

According to Bloomberg News and other sources, the Trump administration had initially planned to release a trade report on the overproduction issue before the U.S.-China summit (on the 24th of last month), but reportedly delayed the announcement to observe the results of the summit.

Last year, South Korea pledged a total of $350 billion in investment in the U.S., including shipbuilding cooperation ($150 billion) and strategic investment ($200 billion), on the condition of lowering tariffs from 25% to 15%.

The government confirmed the construction of the Encinal Gas Combined Cycle Power Plant in Texas, U.S., as the first project of the $200 billion strategic investment in the U.S. The construction of eight large nuclear power plants and the Alaska liquefied natural gas (LNG) development project were left as future discussion topics without concluding whether to proceed with the projects.

Minister Kim explained that such investment in the U.S. was an unavoidable choice to respond to trade pressures, including arbitrary tariff increases and import restrictions by the U.S., such as those under Section 301 of the Trade Act.

Minister Kim stated, "If the business viability is low, we should not invest and withdraw, but the problem is that if we withdraw from a project under the Memorandum of Understanding (MOU), the U.S. will retaliate by raising tariffs and so on." He added, "That's why we negotiated using the expression 'tilted playing field'."

He said, "A crucial goal is to ensure that no more unfavorable trade regulations are applied to us. The future U.S. trade relationship should also be seen as a continuous process of overcoming challenges. That is the reality."

Regarding the Alaska LNG development project, strongly demanded by the U.S., tariff reduction benefits have been secured.

Minister Kim stated, "In the case of the Alaska project, we have received some specific tariff reduction benefits for Korean-made equipment and materials." He added, "We also raise steel tariffs every time we meet U.S. Secretary of Commerce Howard Lutnick, and we have secured a commitment that they will be addressed."

Minister Kim conveyed that there was no U.S. demand for additional semiconductor investment in the recent U.S. investment negotiations.

He said, "Although the MOU (signed last year) includes a semiconductor clause and various items, it was excluded from the overall framework of this discussion."