Hyundai Motor CEO Jose Munoz delivers a message to employees at Hyundai Motor Town Hall Meeting '2025 Leaders Talk' held at the company's headquarters in Gangnam-gu, Seoul on November 5. 2025.11.6 [Photo=Yonhap News]

Trump's 10% Tariff: The Math Adds Up, But the Trade Structure is More Complex

There are interpretations suggesting that "Korea is at an advantage compared to Japan and the European Union (EU) due to the Korea-US Free Trade Agreement (FTA)" regarding the 10% global tariff imposed by US President Donald Trump.

The calculation is that if 10% is added to existing tariffs, Korea, with a base tariff of 0%, would face a relatively lower final tax rate.

The numbers themselves are not incorrect. However, the story is not that simple when examining the entire structure of trade pressure.

This measure is a temporary tariff based on Section 122 of the US Trade Act.

This is a provision that allows the President to impose broad tariffs of up to 15% for 150 days due to balance of payments or foreign exchange imbalances.

Since 10% is uniformly added to all imports, the final tariff is calculated as 'existing tariff rate + 10%'.

Under the Korea-US FTA, a significant portion of Korea's exports to the US have a base tariff of 0%. In contrast, Japan and the EU still have most-favored-nation (MFN) tariffs averaging 2-3% under the World Trade Organization framework.

Arithmetically, this translates to 10% for Korea and 12-13% for Japan. The effect of the FTA is clearly present.

The problem is that this calculation is limited to the 'entry-level stage' of trade pressure.

A more powerful tool in US trade policy is Section 232 of the Trade Expansion Act.

This provision allows for the imposition of high tariffs on specific industries for national security reasons.

Steel and aluminum are already under this framework, and the possibility of its reactivation for automobiles is frequently mentioned.

The current 10% global tariff does not apply cumulatively to items covered under Section 232.

In other words, key Korean export industries like steel and automobiles are not included in the '0% vs. 3%' comparative structure from the outset.

The arithmetic advantage from the FTA is limited to general consumer goods and some industrial products.

There is another axis to this. Section 301 of the US Trade Act.

This provision allows for retaliatory tariffs to be imposed on foreign policies or regulations deemed unfair to US companies.

Large-scale, high tariffs against China were enacted under this provision. It is a means to directly target specific countries regardless of whether an FTA is in place.

Ultimately, US trade pressure has a multi-layered structure, starting with the broad, temporary measures of Section 122, moving to the industry-specific security card of Section 232, and culminating in country-specific sanctions under Section 301.

It is unlikely that the arithmetic differences observed at the Section 122 stage will be maintained at the Section 232 or Section 301 stages.

To summarize:

The calculation of 'existing tariff + 10%' is indeed true.

It is also true that an relative advantage arises for some items due to the FTA.

However, strategic industries such as steel and automobiles are already bound by separate security frameworks, and direct sanction tools like Section 301 exist in case of policy conflicts.

The assessment that "Korea is at an advantage due to the FTA" holds true in part, but it is limited in its significance when considering the overall structure of trade pressure.

The numbers are simple, but the structure is far more complex.