1.

Purpose and Course of Investigation

Section 301 of the Trade Act of 1974 authorizes the Office of the United States Trade Representative (the “USTR”), acting at the President’s direction, to impose tariffs and other trade measures on a foreign country if an investigation determines that the country’s unfair or discriminatory practices restrict US commerce.

Based on its determination that certain countries either lack a regime prohibiting imports of goods produced with forced labor or do not adequately enforce such a regime, the USTR initiated investigations into 60 countries, including Korea, on March 12, 2026. The USTR published its findings and proposed tariffs on June 2, 2026. After receiving more than 1,600 written comments and conducting public hearings for three days, the USTR announced the final actions on July 23, 2026.
 

2.

Key Elements of Forced Labor Section 301 Tariffs
 

A.

Tariff Rates

The Forced Labor Section 301 Tariffs impose differentiated ad valorem duties, ranging from 10% to 12.5%, across the 60 countries under investigation. Countries are classified according to whether they (i) are partially implementing a commitment to establish a prohibition on imports of goods produced with forced labor, (ii) satisfy the terms of a reciprocal trade agreement or similar arrangement, or (iii) fall outside those categories. Korea is in the second group and is subject to a 12.5% tariff rate, inclusive of the applicable most-favored-nation (“MFN”) rate.
 

B.

Exceptions

The exceptions to the Forced Labor Section 301 Tariffs consist of generally applicable exclusions and specified products from 13 countries. The country-specific exclusions are intended to encourage those countries to fulfill commitments to prohibit imports of goods produced with forced labor or to adopt and effectively enforce such prohibitions. The exceptions are as follows:
 

C.

Textile Tariff-Rate Quota (“TRQ”)

For Bangladesh, Cambodia, Indonesia and Malaysia, a duty-free TRQ under the Forced Labor Section 301 Tariffs applies to a specified volume of finished textiles and apparel from those countries, calibrated to their record of importing US cotton and textiles. The TRQ is scheduled to remain in effect for three years and a 10% tariff will apply until further notice. The TRQ is expected to affect Korean companies that manufacture apparel and textile products in Bangladesh, Cambodia and similar locations for export to the US. Those companies should therefore take into consideration the forthcoming implementing notices.
 

3.

Reactions of Major Countries

In its June 2026 findings report, the USTR proposed differentiated tariffs based on each country’s forced labor regime and enforcement records. A 10% rate would apply where the country had established a relevant regime, such as a prohibition on imports of goods produced with forced labor, or had concluded an Agreement on Reciprocal Trade (“ART”) with the US. Otherwise, a 12.5% rate would apply. The EU responded that the measure lacked justification, noting that its forced labor rules are among the world’s most stringent. By contrast, certain countries, including India, Jordan and Sri Lanka, reduced their tariff rate from 12.5% to 10% by adopting prohibitions on imports of goods produced with forced labor or making related commitments.

Following the announcement of the final actions in late July 2026, countries took divergent positions. Some contested the tariffs’ legitimacy, while others emphasized cooperation with the US. Citing its cooperation with US efforts to eradicate forced labor under the USMCA, Canada emphasized its shared objectives with the US and pointed to a bill submitted in June that would strengthen Canada’s prohibition on imports of goods produced with forced labor. China criticized the measure as a textbook example of unilateralism and protectionism. Separately, Brazil—which was subject to a 25% Section 301 tariff distinct from the Forced Labor Section 301 Tariffs—requested WTO dispute-settlement consultations with the US on July 27, 2026.^[2] China also indicated that it intended to participate in the consultations.
 

4.

Implications

Following the announcement of the Forced Labor Section 301 Tariffs, US tariff policy now appears to rest on two principal statutory pillars: (i) Section 232 of the Trade Expansion Act of 1962, applied on a product-by-product basis, and (ii) Section 301 of the Trade Act of 1974. Section 301 is particularly significant because measures imposed under it have no fixed expiration date and remain in effect—subject generally to review every four years—until the USTR withdraws or modifies them. In addition, US courts have broadly upheld the authority to impose such measures.

Although an action was filed in the United States Court of International Trade (the “CIT”) on the day the Forced Labor Section 301 Tariffs took effect,^[3] some commentators consider a ruling of unconstitutionality unlikely. They reason that, unlike tariffs imposed under the International Emergency Economic Powers Act (the “IEEPA”), Section 301 tariffs rest on clear statutory authority permitting the Administration to respond to unfair trade practices—including “a persistent pattern of conduct that tolerates forced labor”—through tariffs and other measures. They also note that prior Section 301 litigation concerning tariffs on China (e.g., HMTX Industries LLC v. US) recognized the USTR’s substantial discretion over its investigative procedures and authority to modify measures.^[4]

Other commentators, however, contend that the measure is unconstitutional. In their view, Section 301 was intended to serve as a “Targeted Trade Remedy” addressing a particular country’s individual unfair trade practices, but the Administration has misused it as a “Universal Tariff” instrument directed at approximately 60 countries worldwide, thereby infringing the Congress’s constitutional taxing power.^[5] How the US courts will assess the measure therefore remains to be seen.

Meanwhile, the USTR is expected to announce the results of the Overcapacity Section 301 Investigation covering 16 countries, including Korea. Since Section 301 tariffs may apply cumulatively, companies should prepare for potential additional tariff exposure. The USTR has indicated, however, that any tariff resulting from the Overcapacity Section 301 Investigation, when combined with the Forced Labor Section 301 Tariffs, would not exceed the 15% rate agreed between Korea and the US. On that basis, the tariff rate resulting from the Overcapacity Section 301 Investigation is estimated at approximately 2.5%. Because that figure has not been officially announced, companies should closely follow developments pending confirmation.

More broadly, forced labor risk management has become increasingly important in the current trade environment. The measure links tariff rates to each country’s forced labor regulatory regime. The US Administration is also increasingly using forced labor concerns as an instrument of trade policy, as illustrated by its release of operational guidance on forced labor enforcement on June 12, 2026,^[6] and its expansion of the Uyghur Forced Labor Prevention Act (the “UFLPA”) Entity List on July 31, 2026.^[7] Accordingly, companies exporting to the US should consider implementing comprehensive supply chain controls, including country-of-origin management systems and screening for forced labor risks throughout their supply chains.