Will Trump Reciprocal Tariffs Hit Zero? The High-Stakes Gamble for the Korea-US Trade Deal
A possible Supreme Court ruling against Trump's reciprocal tariffs could slash South Korean levies to zero. However, expert Victor Cha warns this could jeopardize the $350B investment deal and security cooperation between the two allies.
A $150 billion refund or the collapse of a $350 billion investment pact? Washington and Seoul are bracing for a seismic shift as the U.S. Supreme Court prepares to rule on the legality of President Donald Trump's 'reciprocal' tariffs.
Trump Reciprocal Tariffs: A Potential Plunge from 15% to Zero
According to Victor Cha, Korea Chair at the CSIS, a ruling against the Trump administration could slash tariffs on South Korean goods to zero percent from the current 15%. The court's been deliberating whether the use of the International Emergency Economic Powers Act (IEEPA) to bypass standard trade procedures is constitutional.
If the court strikes down the policy, the Trump government might have to refund roughly $150 billion in collected revenue. Trump has already warned that losing this authority would be a "terrible blow" and poses the "biggest threat in history" to U.S. national security.
The 2026 Election Factor and the Section 338 Threat
The timing couldn't be worse. Both the U.S. and South Korea face pivotal elections in 2026. For South Korean President Lee Jae-myung, a court-mandated zero tariff could trigger domestic calls to nix the trade deal finalized in October 2025. Seoul had committed to a massive $350 billion investment in the U.S. primarily to lower those very tariffs.
However, pulling back from the deal isn't simple. It includes critical cooperation in shipbuilding and South Korea's push for nuclear submarines. Experts suggest that if the IEEPA is invalidated, Trump might pivot to Section 338 of the Tariff Act of 1930, which allows for tariffs up to 50% on countries deemed to use "unreasonable" trade practices.
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