Korea Customs Service "All-Out Effort to Counter US Tariff Risks Including Blocking Circumvention Exports"

The Korea Customs Service is focusing its efforts on responding to the U.S. administration's tariff system. It plans to filter out goods violating origin rules at the customs clearance stage to prevent domestic companies from suffering damage due to circumvention exports, and to implement a U.S. tariff administration response strategy through establishing a cooperation system between Korean and U.S. customs authorities and operating an inter-agency collaboration framework.

On the 11th, the Korea Customs Service announced the "Tariff Administration Response Strategy According to the U.S. Administration's Tariff Policy" at the Foreign Economic Ministers' Meeting held at the Government Seoul Office.

The Trump administration announced on the 2nd plans to impose reciprocal tariffs by country: 25% on Korea, 125% on China, 20% on the EU, 24% on Japan, 46% on Vietnam, and 32% on Taiwan. However, on the 9th, the U.S. shifted direction by postponing the implementation of reciprocal tariffs for countries other than China for 90 days (applying only the basic 10% rate), thus avoiding immediate reciprocal tariff burdens.

Nevertheless, the Korea Customs Service judges that it is difficult to predict the situation after the grace period, and concerns remain about damage to domestic companies due to the increasingly complex U.S. tariff system.

Above all, the U.S. imposition of reciprocal tariffs by country increases the possibility that goods from third countries with higher tariff rates than Korea will be used as routes for circumvention exports. This includes cases where foreign-invested companies in third countries import semi-finished products from third countries, perform simple processing, and export them to the U.S. as Korean products, or where domestic trading companies import semi-finished products from third countries, perform simple processing, label them as Korean products, and export them to the U.S.

The problem is that if Korea is used as a transit point for circumvention exports, the credibility of the country's origin may decline, leading to strengthened U.S. regulations, which could cause damage to the domestic industry.

Accordingly, the Korea Customs Service plans to strengthen origin inspections at the customs clearance stage to prevent Korea from being mistaken as a circumvention export country for third-country goods. It will develop selection criteria reflecting recent trends, detected cases, and circumvention export patterns, and strengthen export inspections before goods are shipped to the U.S. to filter out origin-violating goods in advance.

In addition, it will focus on strengthening planned verification of origins under the Korea-U.S. Free Trade Agreement (FTA) to crack down on cases abusing the FTA between the two countries.

It will proactively conduct export verification focusing on high-risk product groups that are highly likely to be disguised as Korean origin and exported to the U.S. using the FTA, and pre-check companies exporting products subject to U.S. anti-dumping tariffs and major origin verification items to ensure compliance with FTA regulations.

The Korea Customs Service plans to also focus on strengthening international cooperation, including macro-level analysis through big data and establishing an information cooperation system between Korea and the U.S., based on the judgment that a multidimensional analysis of the ripple effects of reciprocal tariffs and the global trade system is necessary.

To maximize support effects for small and medium-sized enterprises (SMEs) exporting to the U.S., collaboration with the Ministry of SMEs and Startups and the Ministry of Trade, Industry and Energy will be strengthened. For example, a hotline will be established and operated between the Korea Customs Service Export-Import Enterprise Support Centers (6 nationwide) and the Ministry of SMEs and Startups Export Support Centers (15 nationwide) to enhance comprehensive consultation services for export difficulties. At the same time, companies identified by the Korea Customs Service as needing government support will be prioritized for support under the Ministry of SMEs and Startups' export support projects (Export Baro Program), enabling synergy between the two agencies' support effects.

Ko Gwang-hyo, Commissioner of the Korea Customs Service, said, "As the complex and multifaceted U.S. tariff system may increase difficulties for domestic export companies, we will actively pursue measures to identify and resolve export companies' difficulties through customs administration." He added, "The Korea Customs Service will also work closely with companies, related associations, and other economic actors to wisely overcome tariff risks while creating new opportunities for advancement."