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Dismisses concerns about exceeding 15% if additional 'overproduction tariffs' are imposed by the US
"US trade relations are a continuous process of overcoming challenges"…Additional semiconductor investment excluded from discussions
As the Donald Trump administration's announcement of additional tariffs looms, trade authorities have reportedly confirmed with the US side that the existing tariff agreement line of 15% will not be exceeded.
According to trade authorities on the 1st, Minister Kim Jung-kwan of the Ministry of Trade, Industry and Energy stated in a recent background briefing regarding US investment negotiations held at the Government Complex Seoul, "It was unfortunate that directly specifying tariffs in the US investment project agreement was not the right scene, so it was omitted." He added, "The US side has expressed its position to maintain the tariff rate at around 15%, whether through Section 301 of the Trade Act or any other form."
This dismisses concerns that the US tariff rate could exceed the 15% cap based on the results of the US Trade Act Section 301 overproduction investigation.
Since the Federal Supreme Court's ruling invalidating reciprocal tariffs in February, the Trump administration has been restructuring its tariff policy using tools such as Section 301 of the Trade Act.
In March, the Office of the United States Trade Representative (USTR) initiated investigations into overproduction and forced labor against 16 economies, 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 economies, including South Korea and China. A 12.5% tariff was applied to South Korea.
Concerns were raised that if additional tariffs resulting from the soon-to-be-announced overproduction investigation are imposed, the tariff rate on South Korean products could exceed the 15% level agreed upon by South Korea and the US last year.
According to Bloomberg and other sources, the Trump administration had initially planned to release a trade report on overproduction issues before the US-China summit (on the 24th of last month), but reportedly delayed the announcement to observe the summit's outcome.
Last year, South Korea pledged a total of $350 billion in investment in the US, 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, USA, as the first project of the $200 billion strategic investment in the US. For the construction of 8 large nuclear power plants and the Alaska Liquefied Natural Gas (LNG) development project, the decision on whether to proceed with the project was left as a future discussion task.
Minister Kim explained that such investment in the US was an unavoidable choice to respond to trade pressures, including arbitrary tariff increases and import restriction measures by the US, such as those under Section 301 of the Trade Act.
Minister Kim stated, "If a project lacks profitability, we should withdraw our investment, but the problem is that if we withdraw from a project under the Memorandum of Understanding (MOU), the US will retaliate by raising tariffs." He added, "That's why we negotiated using the expression 'tilted playing field.'"
He said, "A crucial objective is to ensure that no more unfavorable trade regulations are applied to us. Future US trade relations should also be seen as a continuous process of overcoming challenges. That's the reality."
Regarding the Alaska LNG development project, strongly demanded by the US, tariff reduction benefits have been secured.
Minister Kim stated, "For the Alaska project, we have received somewhat concrete tariff reduction benefits for South Korean-made equipment and materials." He added, "We also raise the steel tariff issue every time I meet with US Secretary of Commerce Howard Lutnick, and we have secured a commitment that they will address it."
Minister Kim conveyed that there was no US demand for additional semiconductor investment in these US investment negotiations.
He said, "While the semiconductor clause and several items are included in the MOU signed last year, they were excluded from the overall framework of this discussion."
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