The legal basis for a landmark trade deal between South Korea and the Trump administration—lowering tariffs in exchange for investment—now appears in doubt.

The Supreme Court’s ruling on Friday morning striking down President Donald Trump’s International Emergency Economic Powers Act (IEEPA) tariffs was widely anticipated, but it has done little to reduce uncertainty for US trading partners. If anything, it has raised new questions—particularly for export-dependent economies like South Korea.

Trump Hasn’t Given Up on Tariffs

The administration has wasted no time signaling its next moves. US Trade Representative Jamieson Greer indicated in January that alternative measures were already being prepared, and Trump announced after the decision’s release that he would impose a 10 percent global tariff for 150 days under Section 122 of the Trade Act of 1974. What will happen once 150 days are up is far less clear. But there are other measures in the president’s toolkit, such as Section 338, which permits the president to impose tariffs on countries deemed to “discriminate against the commerce of the United States.” Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 remain available too, though they require investigative reviews before taking effect. The ruling has not ended tariffs; it has simply reshuffled the legal playbook.

What About Trump’s Deal with South Korea?

For South Korea, however, the ruling casts doubt on the durability of existing arrangements. The November agreement that lowered Seoul’s tariff from 25 percent to 15 percent—struck in exchange for a $350 billion investment commitment in the United States—was built on a legal foundation that no longer exists. Trump has since suggested on social media that South Korea is delaying its first tranche of $20 billion investment, prompting a USTR review and a flurry of high-level visits to Washington. Whether any “deal” truly exists now is an open question that both governments must answer.

The ruling also carries a broader systemic implication: it confirms that the executive branch does not have unilateral authority over US tariff policy. The Supreme Court’s majority opinion stated plainly that Congress would not relinquish its tariff powers “through vague language, or without careful limits,” reaffirming the commerce authority to Congress as stipulated in Article I of the Constitution. This suggests that future tariff measures could face more legal challenges, complicating how foreign governments might approach future trade negotiations with Washington. Uncertainty, it seems, is now a structural feature of US trade policy.

Figure 1. Annual South Korean Trade of Goods by Region, 2021-25 (Unit in Billion $)

Nowhere is this more consequential than in South Korea, where trade accounts for 85 percent of GDP. The data reflects the strain in this relationship: total US-ROK trade in goods fell 1.8 percent from $200 billion in 2024 to $196 billion in 2025, with South Korean exports to the US declining from $128 billion to $122.86 billion. This is significant since the last decrease in goods exports to the US was in 2016 when it drew down by 4.8 percent. The trade surplus narrowed by over 11 percent, driven by both falling exports and a modest rise in US imports.

Seoul, meanwhile, has begun diversifying its trade portfolio, signaling a gradual but deliberate effort to reduce dependence on any single partner. This move appears to be reflected in this year’s data as South Korea’s trade across Asia, Europe, Latin America, and Oceania all increased while that of the United States declined. In fact, 2025 was the first year since 2011 when South Korea’s trade in goods with America declined while its overall global trade grew in the same year. 

Figure 2. Annual Change in South Korean Trade, 2011-25 (Unit: percent)

One thing is clear: the uncertainty regarding US tariff policy is not likely to go away. The Trump administration has demonstrated a consistent willingness to use trade pressure to extract investment, reduce deficits, and generate revenue. Meanwhile, legal challenges against the administration’s tariffs are likely to continue. For South Korea—and for any country with deep trade ties to the United States—navigating this new era of uncertainty will remain a struggle in the weeks and months to come.

About the Author: J. James Kim

J. James Kim is the director of the Korea Program at the Stimson Center. He also serves as a lecturer in the Executive Master’s of Public Policy and Administration Program at Columbia University. Previously, he was the director of public opinion at the Korea Economic Institute, senior research fellow, and director of the Center for Regional Studies and the Center for Public Opinion Research at the Asan Institute for Policy Studies in Seoul, South Korea, where he also directed the institute’s Washington, DC office. Dr. Kim earned a BS and MS in Industrial and Labor Relations from Cornell University and a PhD in Political Science from Columbia University.

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