On July 24, the 10% temporary tariff (Section 122 of the Trade Act) that the U.S. has applied to imports worldwide hits its 150-day limit and expires. The tool set to fill the void is the Section 301 tariff, and Korea has been placed on the list for a 12.5% additional tariff in the “forced labor” investigation. The government’s goal is to hold the 15% tariff cap it agreed to last year. Today we break down the structure of this “tariff time bomb” and where Korea stands. 🧾

TL;DR

  • The U.S. 122 temporary tariff (10%) expires July 24 under its 150-day limit — leaving a tariff gap.
  • The card to fill that gap is the Section 301 tariff (two tracks: forced labor and overcapacity).
  • Korea is included on the 12.5% list in the forced-labor investigation — the government’s aim is to defend the 15% cap struck last year.

📅 What Ends on July 24?

On July 24, the legal window for the 10% temporary tariff the U.S. is imposing runs out. The tariff rests on Section 122 of the Trade Act, enacted in 1974, which lets the president impose an emergency tariff of up to 15% to respond to a serious balance-of-payments deficit or a fall in the dollar’s value. But the measure is capped at 150 days, so the 10% tariff applied this year loses effect on July 24 (local time).

The catch is that the tariff burden does not disappear just because this tariff does. The U.S. has been preparing a replacement well before the clock runs out.

⚖️ Why Switch From 122 to 301?

Behind the shift to Section 301 lies a string of earlier tariffs that were repeatedly blocked. When the U.S. judiciary ruled that reciprocal tariffs based on the International Emergency Economic Powers Act (IEEPA) were unlawful, the Trump administration immediately put up a Section 122 10% temporary tariff as a fallback. But even the Section 122 tariff drew an unlawful ruling at a lower court, and with the 150-day limit built in from the start, it was never a card that could be carried far.

So the tool the Office of the U.S. Trade Representative (USTR) reached for is Section 301. In March, USTR opened a Section 301 investigation on two grounds — “overcapacity” and “insufficient blocking of imports made with forced labor” — and disclosed a schedule to wrap up the probe and apply new tariffs before the Section 122 tariff expires on July 24.

🏭 Two Tracks of Section 301 — 12.5% Forced Labor and Overcapacity

The Section 301 tariff splits into two investigations of different character, and Korea appears in both. One is forced labor, the other overcapacity.

In the forced-labor investigation, USTR proposed grouping together economies it deemed to have failed to sufficiently adopt and enforce bans on imports made with forced labor, and levying an additional tariff on them. Korea was placed in this group and classified as subject to a 12.5% tariff. Reports differ on the size of the targeted group — anywhere from around 40 to over 50 economies — but multiple outlets agree that Korea falls in the 12.5% band.

The overcapacity investigation began in March covering 16 economies, including Korea. USTR cited Korea’s persistent trade surplus with the U.S. as grounds for overcapacity, and major export sectors — semiconductors, batteries, autos, shipbuilding, robots — were swept into the probe. The impact is likely to vary by sector, and the specific tariff rate to be applied to the overcapacity portion has not yet been disclosed in final form.

🇰🇷 Korea’s ‘15% Line’ and the July 9 Hearing

The government’s core goal is to keep the two Section 301 tariffs, even combined, from exceeding the 15% cap agreed last year. In last year’s tariff talks with the U.S., Korea agreed to pledge a $350 billion (about 538 trillion won) investment plan in the U.S. in exchange for lowering the originally flagged 25% reciprocal tariff to 15%.

To hold that ceiling, the government is engaging directly with the U.S. process on the ground. On July 9 (local time), an official from the commercial office of the Korean embassy attended a USTR-hosted hearing at the U.S. International Trade Commission (USITC) in Washington, D.C., and conveyed the position that the 12.5% tariff is unjustified. Ahead of the hearing, the government and the Korea International Trade Association argued in a written submission that the 12.5% additional tariff on Korean goods lacks sufficient basis and should be reconsidered, and that if a tariff is unavoidable it should be cut to 10%.

🔎 Points to Watch

The crux here is not each individual rate but the “combined result.” Whether the 15% cap Korea has defended holds or breaks depends on how the numbers from the two investigations — forced labor and overcapacity — add up.

The timeline matters too. With the Section 122 tariff expiring on July 24, the U.S. is likely to finalize the shape of the Section 301 tariff around that point. Sectors with large exposure to U.S. exports, such as semiconductors and shipbuilding, could see the size of the hit shift depending on how the overcapacity probe concludes — so the announcement timing and the product-level breakdown are worth close attention.

📝 Wrap-up

July 24 is both the day the existing tariff ends and the juncture at which a new tariff regime takes shape. With reciprocal tariffs and the Section 122 tariff blocked one after another, the U.S. is rebuilding its tariffs on the new basis of Section 301, while Korea — placed on the 12.5% forced-labor list — keeps up negotiations and advocacy to defend the 15% cap. The final rate, the timing of application, and the sector-level handling of core industries like semiconductors and shipbuilding remain open. It is worth checking the announcement and gauging the response direction from there.

※ This post is for informational purposes only and is not investment advice.

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