Amid a multi-layered structure where Sections 122, 301, and 232 operate simultaneously following the ruling against IEEPA's illegality, customs clearance strategies for South Korean companies remain a work in progress.
َاThe tariff war intensified by the Trump administration after returning to power in January 2025 has reached the present day through five structural shifts over the past 15 months: imposition, suspension, hikes, negotiations, illegality rulings, and alternative legislation.
The most fatal issue for South Korean companies is not the tariff rates themselves, but the fact that the rules keep changing. Export managers now find themselves in a situation where they must check every morning whether yesterday's tariff rate is still valid today, and the very criteria for calculating contract unit prices and logistics schedules are being shaken.
As of April 2026, the U.S. tariff system has been reorganized into a multi-layered structure in which three legal pillars operate simultaneously, and its ultimate destination remains unclear.
1. The Birth and Collapse of IEEPA Tariffs — April 2025 to February 2026
On April 3, 2025, President Trump finalized and announced country-specific reciprocal tariffs targeting 183 countries.
This was an unprecedented measure that effectively levied tariffs on virtually every country on Earth. The legal basis was IEEPA, the International Emergency Economic Powers Act.
This law was originally granted to give the president the authority to take economic sanctions in response to foreign threats during a national emergency, and its use as a means to impose tariffs was historically very unusual. The Trump administration defined America's chronic trade deficit itself as a 'national emergency' and, based on this, implemented comprehensive high tariffs targeting virtually the entire world.
Double-digit reciprocal tariffs were imposed on South Korea, and taking this as an opportunity, South Korea and the United States entered into negotiations linking a large-scale U.S. investment package with tariff adjustments.
During the negotiations, President Trump continuously raised the pressure by using the expression 'one-stop shop' on social media, suggesting the possibility of including defense cost-sharing issues in trade negotiations. Through a series of negotiations in the second half of 2025, the reciprocal tariff rate for South Korea was adjusted, and the reduced tariff rate was officially applied starting August 7. However, the optimism that this agreement would be maintained stably did not last long.
On February 20, 2026, the U.S. Supreme Court ruled that the Trump administration's imposition of reciprocal tariffs based on the International Emergency Economic Powers Act (IEEPA) was illegal.
The Supreme Court specified that IEEPA does not grant the U.S. President the authority to impose tariffs, emphasizing that the U.S. Constitution grants the power of taxation very clearly to Congress.
This also maintained the conclusions of the lower courts.
Accordingly, refund applications were expected to become possible for tariffs imposed based on IEEPA from early April 2025.
President Trump immediately protested the ruling and publicly criticized the Supreme Court justices who made the illegal ruling, but made clear his will to continue the protectionist stance by declaring that he would mobilize other legal means to maintain tariffs right after the ruling.
2. Stopping the Tariff Vacuum — The Emergence of Trade Act Section 122
Immediately following the Supreme Court's illegal ruling, President Trump announced a 10% temporary tariff on global imports based on Section 122 of the Trade Act of 1974, and stated that he would soon push to raise it to the statutory maximum of 15%.
Section 122 of the Trade Act is a provision that grants the president the authority to impose tariffs of up to 15% for a maximum of 150 days under the pretext of responding to balance-of-payments issues, and the effective date was 00:00 on February 24, 2026.
As a result, despite court intervention, the current trade environment remains a structure that is much more costly than at any time in recent decades.
The tariff impact on consumers is not uniform across industries; in particular, durable consumer goods such as home appliances and electronics are expected to see cumulative price increases during 2025–2027, and pharmaceuticals and auto parts are areas where additional tariff hikes are frequently discussed for the second half of 2026.
Trade Act Section 122 tariffs have a fatal limitation. Such tariffs automatically expire after 150 days and cannot be extended without congressional approval. Since they can be applied for a maximum of 150 days following their implementation on February 24, 2026, they are scheduled to automatically expire in late July.
Around this time point, possibilities of a tariff vacuum occurring or a transition to a new Section 301 tariff system are open simultaneously. This is why the Trump administration is rapidly preparing its next card ahead of this deadline.
3. The Rise of Precision Protectionism — Initiation of Section 301 Investigations
To fill the temporary nature of Section 122 tariffs, the Trump administration immediately pulled out its next card.
On March 11, 2026, the Office of the United States Trade Representative (USTR) officially initiated a Section 301 investigation into 16 economic entities including South Korea, China, Japan, the EU, and Mexico, citing 'structural overcapacity and production capabilities.' In South Korea's case, its trade surplus with the U.S. reached $56 billion as of 2024, making it a major target of the investigation.
The USTR set a schedule to receive written comments and hearing requests by April 15, and hold a hearing in Washington, D.C., on May 5. The official goal is to wrap up the investigation before late July, when the 150-day time limit for Section 122 tariffs expires. Separately, the USTR also simultaneously launched a second Section 301 investigation dealing with whether to ban imports of goods produced with forced labor, with corresponding hearings scheduled to be held from April 28.
The fact that the schedule of the Section 301 investigation overlaps with the expiration timing of Section 122 tariffs is interpreted as reflecting the intention to establish an alternative tariff system before the termination of Section 122. The Trump administration aims to drastically shorten the investigation procedure, which typically takes over a year, to 4 to 5 months so that a new tariff system can be implemented without a vacuum in late July.
Section 301 of the Trade Act is a law that allows tariffs to be imposed on the grounds of unfair trade practices by a partner country. Unlike IEEPA, it is an instrument whose constitutionality has already been verified through thousands of lawsuits in court, leading to the dominant analysis that it will be much harder to face legal challenges this time.
U.S. Treasury Secretary Scott Bessent stated, "We will utilize tariff authorities under Sections 232 and 301, which have been verified through thousands of legal challenges," and added, "Combining these alternative means will leave 2026 tariff revenues virtually unchanged." The fiscal goal of maintaining tariff revenue has not changed at all even after the court's illegality ruling.
Tariff Landscape Faced by South Korean Companies as of April 2026
Currently, South Korean exporters to the U.S. are placed in a triple-layered tariff structure.
First, based on Section 232 of the Trade Expansion Act, a 25% tariff is applied to steel and aluminum, and additional tariffs are also imposed on some items such as automobiles and auto parts. These items continue to be subject to existing tariffs regardless of the IEEPA illegality ruling.
Second, most other items are currently subject to global tariffs based on Section 122. After the Section 122 tariffs expire in late July, there is a high possibility of transitioning to a new tariff system according to the results of the Section 301 investigation.
If the USTR completes its investigation before July, the U.S. president may review restoring tariffs on major countries to a level close to existing reciprocal tariffs, or imposing additional tariffs depending on the level of cooperation. In addition, there is a possibility of utilizing the investigation results as negotiation leverage to demand expanded market opening or the alleviation of non-tariff barriers.
Third, separate anti-dumping investigations are underway for certain items such as South Korean chemical products. In January 2026, the U.S. Department of Commerce issued a preliminary determination to the effect of dumping against South Korean chemical products (monomers, oligomers). Given that separate anti-dumping tariffs could be added if the preliminary determination is finalized, the petrochemical industry, which has a high proportion of exports to the U.S., has no choice but to monitor closely. The imposition of Section 232 product tariffs on semiconductors and pharmaceuticals is also at the stage of being discussed as policy options, and actual execution may vary depending on the situation around July.
In addition to this, as IEEPA's comprehensive emergency authority is restricted, the U.S. is likely to concurrently utilize laws with disparate procedures and characteristics, such as Sections 122, 301, 232, and 338. This implies a transition not to a single high-tariff-centered structure like in the past, but to a precision protectionist structure combining item-by-item and issue-by-issue investigations, security framing, and the raising of non-tariff barrier issues. The structure where a single tariff rate could be negotiated and resolved has disappeared, and a complex response system requiring different applicable laws and response strategies for each item is demanded.
How South Korean Companies and the Government Are Surviving
Amid the changing tariff environment, South Korean companies are going beyond passively responding to tariff rate fluctuations and are simultaneously pursuing structural adaptation strategies.
Representative trends include diversifying production bases, expanding local investments in the U.S., geographically dispersing export markets, and strengthening the management of exchange rate and raw material risks. Hyundai Motor Group's announcement of a $21 billion investment in the U.S. over the next four years is a representative case of this localization strategy, containing the intention to minimize tariff risks while strengthening its position within the U.S. market.
The government is also building a multi-layered defense strategy. While continuing bilateral negotiations with the United States, it is reviewing the possibility of utilizing WTO and FTA dispute procedures, alongside supporting tariff refunds and establishing trade risk early warning systems.
In the 2026 National Trade Estimate Report on Foreign Trade Barriers released by the U.S. Trade Representative (USTR), the volume related to non-tariff barriers concerning South Korea has increased compared to the previous year, pointing to a growing possibility of expanded trade pressure into non-tariff areas.
Given that non-tariff areas such as digital regulations, technology standards, and environmental and labor standards can emerge as new trade pressure tools, the scope of corporate responses needs to expand beyond tariff issues.
Tariff Refunds: Opportunity or Trap?
The ruling on the illegality of IEEPA tariffs has created another variable for South Korean companies.
The U.S. government is preparing refund procedures for tariffs invalidated by the court judgment, and in last month's total U.S. tariff revenue, some amounts began to be refunded, leading to a phenomenon where final revenue decreased. According to some private analyses, projections estimate the potential refund scale of IEEPA-based tariffs to be in the hundreds of billions of dollars.
U.S. Customs and Border Protection (CBP) plans to operate a phased refund procedure, and has guided that processing individual cases will take a certain amount of time. This is the background behind growing expectations that exporters to the U.S. may get back some of the IEEPA-based tariffs paid since early April 2025.
However, reality is not easy. Because the Supreme Court did not issue a direct refund order and remanded the case to the Court of International Trade (CIT), actual refunds and their scope are expected to be specified through future lower court proceedings. Going forward, filing refund claims by company, verifying individual tariff payment details, determining interest calculation methods, and administrative settlement procedures are expected to proceed sequentially, and considering the scale of the case and the number of stakeholders, the possibility that procedures will be prolonged to a multi-year rather than multi-month scale is hard to rule out.
Taking into account the Court of International Trade and subsequent appellate procedures, law firms and accounting firms believe that considerable time will be required until the refund and its scope are finalized.
However, since the Supreme Court remanded the case to the CIT without directly ordering refunds, it must also be taken into consideration that the final refund scope and schedule may vary depending on additional litigation and administrative procedures.
For companies, it is necessary to initiate preparations for refund applications early, but establish financial planning on the premise that it is difficult to lead to immediate cash recovery.
Keep an Eye on Late July
If there is a point in time that South Korean companies should mark in red on their calendars, it is late July.
This coincides with the expiration of the Trade Act Section 122 temporary tariffs and the scheduled completion time of the USTR's Section 301 investigation. It is interpreted as the administration's goal to ensure that a new tariff system is applied immediately around late July so that a tariff vacuum does not occur.
The nature and level of tariffs to fill the post-July period have not yet been finalized. If the USTR completes the Section 301 investigation, the U.S. president may review restoring tariffs on major countries to a level close to existing reciprocal tariffs or imposing additional tariffs depending on the level of cooperation, and scenarios utilizing them as negotiation leverage to demand expanded market opening or alleviation of non-tariff barriers are also discussed. The imposition of Section 232 product tariffs on semiconductors and pharmaceuticals is also at the stage of being discussed as policy options, and domestic semiconductor companies such as Samsung Electronics and SK Hynix are also closely watching the situation after July.
A question more important than whether tariff rates will rise or fall is whether the rules will continue to change in the future. If other trade tools such as Section 122 temporary tariffs, Section 232 product tariffs, or Section 301 investigations are concurrently utilized going forward, existing agreements are likely to be reinterpreted and renegotiated under new legal frameworks and political environments rather than maintained under identical conditions. Both the South Korean government and companies have reached a point where they must move away from a package response strategy premised on a single high tariff and build a system that constantly manages multi-layered trade pressure scenarios reflecting the applicability of each law.
The tariff war is not over. However, with the transition from a single emergency tool called IEEPA to a multi-layered structure where Sections 122, 301, and 232 coexist, the environment has become close to a game where the rules keep changing. What South Korean companies should look at is not the tariff rate figures themselves, but the 'rule change structure' of under which legal framework and when the rules change.