The US 10% global tariff under Section 122 expires July 24, 2026. Here's what the incoming Section 301 tariffs mean for Korea's 15% tariff cap and global trade.
Following our four earlier posts on oil, equities, rates, and semiconductors, this final post in the series covers another major variable reshaping global trade: the US "10% global tariff" is set to expire at midnight on July 24, 2026. As a replacement measure under Section 301 of the Trade Act looms, major trading partners — including South Korea — are watching closely.
How we got here: the birth and deadline of the Section 122 tariff
The story starts on February 20, 2026. The US Supreme Court struck down the "reciprocal tariffs" imposed under the International Emergency Economic Powers Act (IEEPA) in a 6-3 ruling, instantly dismantling the country-by-country tariff structure the Trump administration had built (ranging from 10% to 46%, with China peaking at 145%).
The administration responded almost immediately. Citing Section 122 of the Trade Act of 1974, it imposed a flat 10% tariff on all countries — the first time this authority had been invoked in decades. The catch: Section 122 carries a hard 150-day legal limit. Counting from its February 24, 2026 effective date, the tariff is set to automatically expire at midnight on July 24.
The tool set to fill the gap: Section 301
Since the administration cannot extend the Section 122 tariff on its own authority, the US Trade Representative (USTR) has been running Section 301 investigations since March, built around two justifications:
- Structural overcapacity: the argument that overcapacity in certain industries burdens US trade
- Forced labor: the argument that goods made with forced labor create unfair competition
USTR has proposed applying a 12.5% tariff on 45 economies it judges to have insufficiently implemented forced-labor import restrictions — and South Korea reportedly falls into this group. On top of that, a separate Section 301 investigation targeting industrial overcapacity is underway covering 16 economies, including Korea. USTR has stated it aims to complete this investigation before the Section 122 tariff expires on July 24.
The number Korea is watching most closely: the 15% cap
The South Korean government's top priority is clear: ensure that even if both Section 301 tariffs (overcapacity and forced labor) are combined, the total rate doesn't exceed the 15% cap agreed to in last year's US-Korea trade negotiations.
That 15% figure has a backstory. In July 2025, South Korea secured a deal to lower the previously threatened 25% reciprocal tariff down to 15%, in exchange for a commitment to $350 billion in US-bound investment. Of that total, $150 billion was earmarked for shipbuilding cooperation, and a US-Korea Shipbuilding Cooperation Center has since opened in Washington, DC. President Trump has recently signaled continued interest in shipbuilding cooperation and said he would "take a look at" Korean companies.
For context, Brazil — which never reached a broader trade agreement with the US — has already been hit with a 25% tariff under a Section 301 investigation, illustrating just how much outcomes can diverge for countries without a negotiated framework in place.
What investors and exporters should watch
- Any tariff gap after July 24: Whether Section 301 tariffs take effect immediately or there's a temporary gap could drive short-term market volatility.
- Korea's final tariff rate: Whether the 15% cap actually holds will directly affect earnings outlooks for Korea's export-heavy sectors — semiconductors, autos, shipbuilding, and steel.
- KRW/USD volatility: Elevated trade uncertainty typically drives a flight to safety, which can add volatility to currency markets.
- Additional legal tools in play: Trump recently invoked Section 338 of the 1930 Tariff Act against Canada, a reminder that the administration may reach for other legal levers beyond Section 301.
Bottom line: five stories, one thread
The five stories covered in this series — the Hormuz Strait oil shock, the Kospi selloff, the Fed's rate hike risk, TSMC's AI chip earnings, and now this tariff deadline — may look unrelated at first glance, but they're all connected by a single chain: geopolitical risk → inflation pressure → tighter monetary policy risk → valuation compression → trade policy uncertainty. Understanding this chain is central to building an investment strategy for the second half of 2026.
We'll keep bringing you fast, in-depth coverage of the biggest stories shaping global markets right here on INVEST NEWS.
This post is based on reporting from customscity.com, Global Economic, Financial News, and tariffstool.com as of July 23, 2026. This content is for informational purposes only and does not constitute investment advice.
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