The Trump Era: A Total Summary of the 'Tariff Bomb' That Hit the Korean Economy (Steel, Washers, and the Trade Lesson)

The first term of President Donald Trump (2017–2021), marked by the slogan 'America First,' brought about a tectonic shift in the global trade order. South Korea, in particular, was subjected to intense pressure to renegotiate the KORUS FTA and faced high-rate tariffs on specific industries, leading to significant market turmoil.

This article analyzes the core details of the major tariff measures imposed on South Korea by the Trump administration—the 'Section 232 Tariffs' and the 'Section 201 Safeguard Tariffs'—and examines the lessons Korean companies learned while navigating this crisis.

1. The Two Edges of Trade Pressure: Section 232 and Section 201

The Trump administration primarily relied on two legal justifications to impose tariffs on key trading partners, including Korea.

✅ Section 232 Tariffs (Trade Expansion Act of 1962)

• Nature: A measure to impose high tariffs on imports, citing 'national security' as the primary justification. Korea's steel and aluminum industries were the main targets of this provision.
• Characteristic: This is the most powerful tool the U.S. can use to unilaterally impose tariffs, making it highly controversial and a frequent subject of WTO disputes.

✅ Section 201 Tariffs (Safeguard Measures)

• Nature: An emergency import restriction (safeguard) imposed temporarily when a surge in imports of a specific product threatens to cause 'serious injury' to a domestic industry. Korean washing machines and solar products were the targets.
• Characteristic: Although permissible under WTO agreements, its misuse often leads to significant trade friction.

2. Core Target 1 – Steel and Aluminum Tariffs: Choosing 'Quotas' Over a 'Tariff Bomb'

In 2018, the U.S., using Section 232 of the Trade Expansion Act, imposed a 25% tariff on imported steel and a 10% tariff on aluminum. This posed a critical threat to South Korea's major export industry: steel.

• Korea’s Response and Result: Through negotiation with the U.S., South Korea agreed to an exemption from the tariffs in exchange for accepting a 'quota system' that restricted Korean steel exports to the U.S. to 70% of the average export volume over the previous three years.
• Impact: While the immediate tariff threat was avoided, the quota restricted export volume, forcing domestic steel companies to make significant changes to their production and sales strategies. This concession became a key element in the renegotiation of the KORUS FTA, which ultimately helped preserve the core trade agreement.

3. Core Target 2 – Safeguard Tariffs: Washing Machines and Solar Products

Starting in early 2018, the Trump administration activated the Section 201 Safeguard to target specific Korean exports.

✅ Tariffs on Large Residential Washing Machines

• Content: This measure limited the import volume of large washing machines made by companies like Samsung Electronics and LG Electronics. Volumes exceeding the quota were subject to high tariffs, up to 50%.
• Korean Corporate Response: To circumvent the tariffs and maintain market share, Korean companies adopted a 'local production' strategy, constructing manufacturing plants directly in the U.S. (e.g., Samsung in South Carolina, LG in Tennessee).
• Follow-up: The Korean government challenged the U.S. at the WTO and won the final case in 2023. However, by the time the safeguard ended, Korean companies had already completed their shift to local production, mitigating the practical benefit of the WTO victory.

✅ Tariffs on Solar Products

• Content: Safeguard tariffs were also imposed on imported crystalline silicon photovoltaic cells and modules, significantly impacting the Korean solar industry.
• Impact: Domestic solar companies were compelled to adapt by relocating production facilities to Southeast Asia or by actively pursuing plans to establish factories within the U.S.

4. Lessons Learned: The Korean Corporate Strategy in the Tariff Era

The tariff pressure from the Trump administration inflicted severe challenges but also left critical lessons for Korean businesses:

1. The Necessity of 'Supply Chain Diversification': Reducing dependence on a single market and diversifying manufacturing and supply chains to the U.S. or third countries became an essential survival strategy.
2. The Reinforcement of 'Technological Competitiveness': A consensus emerged that only products with clear, superior technological competitiveness could survive in the market, regardless of tariff barriers.
3. The Critical Role of 'Trade Diplomacy': The importance of the government's ability to conduct proactive trade negotiations and utilize international dispute resolution (like the WTO) to protect domestic industries was sharply highlighted.

Conclusion: Trade Pressure is an 'Unfinished Homework'

The Trump administration's tariffs delivered a shock to the Korean economy but also forced Korean companies to innovate their strategies for global survival. Trade conflicts and protectionism remain ever-present risks. Senior entrepreneurs and investors must diligently analyze these shifts in the global trade environment and adopt proactive strategies to minimize risks and ensure sustainable growth.