Trump's Section 301 threat looms over Korea, but chips and autos seen largely insulated

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Trump's Section 301 threat looms over Korea, but chips and autos seen largely insulated

Published: 24 Feb. 2026, 19:14 Updated: 25 Feb. 2026, 00:20

SARAH CHEA
[email protected]

LEE JAE-LIM
[email protected]

Audio report: written by reporters, read by AI

U.S. President Donald Trump addresses a press conference about the Supreme Court's striking down of most of his tariffs in the briefing room at the White House in Washington on Feb. 20, 2026. [EPA/YONHAP]

[NEWS ANALYSIS]

With the Donald Trump administration moving to invoke an alternative trade law overseen by the United States Trade Representative (USTR), Korea is carefully reviewing a range of bills and regulations previously flagged by the USTR as unfair.

Section 301 of the Trade Act of 1974, now emerging as what some in Washington describe as Trump’s “Plan B,” carries no statutory ceiling on tariff rates and sectors. But even if Korea falls under the provision, experts say the country’s key industries, such as semiconductors and automobiles, are expected to face limited impact.

While Korean carmakers are already subject to a 15 percent sectoral tariff reinstated despite the Supreme Court’s decision, chipmakers such as Samsung Electronics and SK hynix supply a significant share of memory chips to the United States via Taiwan — a route that could shield them from potential reciprocal tariffs on semiconductors.

The USTR recently announced that it would examine whether major trading partners discriminate against U.S. companies in digital goods and services. The tariffs were imposed under Section 301 — the same authority Washington used to levy 25 percent duties on Chinese goods during Trump’s first term.

Korea’s trade surplus with the United States reached $49.5 billion last year.

What Washington has called 'unfair'
For years, the U.S. government has cited several Korean measures as de facto non-tariff barriers such as the efforts to legislate the Online Platform Act, restrictions on the overseas transfer of high-resolution geographic data, and limitations in agricultural and livestock markets, which may once again find themselves in the crosshairs.

The issue also intersects with the recent Coupang issue, as U.S. investors to the firm including GreenOaks and Altimeter Capital, petitioned the USTR last month to investigate what they described as Korean government actions affecting Coupang and to consider remedies under Section 301.

United States Trade Representative Jamieson Greer, left, shakes hands with Trade Minister Yeo Han-koo at the 2026 World Economic Forum in Switzerland on Jan. 20. [YONHAP]

“Measures such as the Online Platform Act or agricultural market restrictions — long identified by the United States as non-tariff trade barriers — are likely to be raised as grounds for action under Section 301,” said Shin Tong-chan, an international trade attorney at law firm Yulchon.

“Ordinarily, such investigations take nine months to a year,” he added. “But given the urgency of the current administration, it may be concluded within five months, with announcements made sequentially as each country’s review is completed.”

The Online Platform Act has been championed by the governing Democratic Party as a means of curbing alleged unfair practices by dominant domestic platforms like Naver and Kakao and protecting small merchants.

Yet Washington has repeatedly objected, viewing the legislation as disproportionately affecting U.S. tech firms.

Uncertainty also surrounds digital regulations tied to high-precision mapping data, requested by U.S. companies such as Google and Apple.

Earlier this month, Google submitted supplementary documentation in support of its request to transfer 1:5,000-scale mapping data overseas. While the company is said to have accepted many government conditions, including masking sensitive security facilities, it reportedly did not include a commitment to establish a domestic data center, a major condition from the Korean government. A government review meeting is expected later this month.

Following the recent Supreme Court ruling, Trump signaled his intention to invoke Section 122 of the Trade Act to raise reciprocal tariffs to 15 percent as a temporary substitute for existing duties — a measure that may remain in effect for up to 150 days without additional congressional approval.

Tariffs risk backfiring on U.S. Big Tech
Industry experts broadly agree that imposing tariffs on semiconductors — whether universal, reciprocal or sector-specific — would hurt the AI industry as a whole. However, the brunt of the damage would likely fall on U.S. Big Tech companies, which are already grappling with chip shortages and rising prices amid an aggressive push to build AI infrastructure.

The 15-percent universal tariff would apply to all imported goods, but Korea-made chips are exempt for now due to ongoing trade negotiations between Seoul and Washington.

The logo of Taiwan Semiconductor Manufacturing Company (TSMC) is displayed at its fabrication plant in Kaohsiung, Taiwan, June 7, 2025. [REUTERS/YONHAP]

In practice, only a small share of Korean semiconductor exports are shipped directly to U.S. Instead, a significant share is sent to Taiwan — home to foundry giant TSMC — or to other East Asian countries where U.S. firms operate chip packaging facilities.

“Even if tariffs are imposed, the impact on Korean chipmakers would likely be limited, particularly for memory chips that are currently in hot demand,” said industry analyst Lee Joo-wan. “Most U.S. semiconductor firms are fabless. High bandwidth memory [HBM] produced by Samsung Electronics or SK hynix is typically shipped to Taiwan’s TSMC for final assembly before being sent to the United States. In that sense, Korean HBM components shipped to Taiwan are not directly subject to U.S. tariffs, unless Taiwan itself imposes them.”

A bilateral joint fact sheet signed in November of last year states that the U.S. would provide tariff terms for semiconductors “no less favorable” than those granted to other partners, including Taiwan. This effectively means that Washington agreed not to impose higher tariffs on Korean-made chips than on those from other countries.

Jensen Huang, CEO of Nvidia, right, and C.C. Wei, CEO of TSMC pose for group photo at a dinner he host with Taiwan tech CEOs in Taipei, Taiwan on Jan. 31. [REUTERS/YONHAP]

According to data from the Korea International Trade Association, based on chip-specific HS codes covering integrated circuits, the United States ranked 11th among Korea’s export destinations last year, importing $570 million worth of chips. The figures exclude transistors, diodes and other related semiconductor devices typically included in broader industry statistics.

China was the largest market at $43.2 billion, followed by Taiwan at $34.7 billion, among 63 major trading partners.

In Taiwan’s case, more than 70 percent of the import value from Korean semiconductors was concentrated in memory chips, which are likely shipped to TSMC for packaging, where Korean HBM is integrated with high-performance processors such as Nvidia’s GPUs before the final products are shipped to the U.S.

By contrast, the leading exporters of semiconductors to the U.S. in the first half of last year were Malaysia, where chip packaging facilities of Micron and Intel exist, at $13 billion and Taiwan at $12 billion. Korea ranked sixth, with $3.3 billion.


Ahn Ki-hyun, executive vice president of the Korea Semiconductor Industry Association, said it is highly unlikely that the Trump administration would ultimately move forward with semiconductor tariffs. He pointed to the prolonged delay as further evidence, arguing that such measures would hurt not only global suppliers but also U.S. companies, due to the ongoing chip shortage and the current lack of alternatives to high-end memory chips from Korea.

“For the administration to proceed with tariffs, it would have to conclude that the benefits outweigh the damage to U.S. companies,” Ahn said. “That would require a strong justification — and at this point, there doesn’t appear to be one.”

A general view of the Taiwan Semiconductor Manufacturing Company's (TSMC) fabrication plant in Kaohsiung, Taiwan, June 7, 2025. [REUTERS/YONHAP]

The Section 232 of the U.S. Trade Expansion Act is also emerging as an alternate tariff tool, one that could bring Korean semiconductor exports within the ambit of potential tariff measures.

Under the law, which was already invoked to levy tariffs on Korean automobiles, auto parts, steel and aluminum, Trump may impose duties without a statutory ceiling if the Commerce Department determines that imports imperil national security.

Despite chips having thus far been exempt from tariff measures, the Trump administration repeatedly signaled that semiconductors and pharmaceuticals were among the items it could target with tariffs of up to 100 percent, citing national security concerns and persistent trade imbalances.

The Wall Street Journal reported on Monday that the Trump administration is reviewing the possibility of imposing additional tariffs on six industrial sectors — including batteries, cast iron, and iron and steel fittings — by invoking the Section 232.

BY SARAH CHEA, LEE JAE-LIM [[email protected]]

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