The Trump administration has launched an investigation under Section 301 of the U.S. Trade Act into 16 economic entities, including South Korea.

The Office of the U.S. Trade Representative said on March 11 local time it would start the probe on the grounds of "unfair trade practices related to excess production capacity" and "production of goods by forced labor". It published the notice in the Federal Register. The targets include South Korea as well as China, the European Union, Japan, Taiwan, India, Vietnam and Mexico, among 16 countries.

USTR argued these countries have maintained trade surpluses with the United States through intentional overproduction. USTR head Jamieson Greer (제이미슨 그리어) said at a briefing that key trade partners have built production capacity that does not align with market incentives of domestic and global demand. He said such excess capacity leads to overproduction, persistent trade surpluses and underutilisation of manufacturing capacity. He listed government subsidies, suppressed domestic wages, non-commercial activities by state-owned firms, market barriers and inadequate environmental and labour protections as causes.

In the Federal Register notice released the same day, USTR stressed that for South Korea, "evidence exists of structural excess production capacity and production through large or persistent trade surpluses". It cited exports of electronic equipment, autos and auto parts, machinery, steel and ships as behind the surplus with the United States. South Korea's goods trade balance with the United States surged from a $10 billion deficit in 2023 to a $52 billion surplus in 2024. USTR added that "the South Korean government has also acknowledged the need to reduce capacity in the petrochemical sector".

The probe follows the Supreme Court's decision invalidating reciprocal tariffs based on the International Emergency Economic Powers Act, saying they were an abuse of authority. Trump had also foreshadowed it in advance. Section 301 provides legal authority to impose responses such as tariffs based on unfair trade practices by another country, and was used during Trump's first term as the basis for imposing tariffs of up to 25 percent on China. At the time, the tariff actions were accompanied by tighter reviews by the Committee on Foreign Investment in the United States, export controls and World Trade Organization dispute filings.

The Trump administration is currently imposing a 10 percent global tariff on imports worldwide under Section 122 of the Trade Act, which is valid only until July 24 without congressional approval. It plans to complete the Section 301 investigation within that period. Greer said, "The goal is to reach a conclusion before the global tariff expires."

Procedurally, USTR will accept written submissions from interested parties from around March 17 to April 15, and hold a public hearing around May 5. After receiving rebuttal submissions for 7 days, it will finalise responses such as tariffs, service fees and negotiations. If tariffs are imposed, South Korea is expected to see the 15 percent level of reciprocal tariffs restored under the existing U.S.-South Korea tariff agreement. Greer said, "Agreements signed with each country are maintained independently, and commitments made in the agreement will be considered when deciding response measures."

South Korea, which has a free trade agreement with the United States, has virtually no explicit cases of tariff discrimination, but the issue is non-tariff barriers. Issues involving the interests of U.S. big tech companies, such as online platform regulation and a proposed revision to the Information and Communications Network Act, are likely to come under scrutiny. A petition for an individual investigation that was filed and later withdrawn by Coupang investment companies is also interpreted as being handled within the framework of this Section 301 probe. Greer also left open the possibility of additional investigations on grounds such as a digital services tax, drug prices and seafood market access.

The presidential office said on the day, "We plan to actively consult with the U.S. side so that the balance of benefits secured under the existing U.S.-South Korea tariff agreement is not undermined and we can receive treatment that is not disadvantageous compared with major countries."