On April 2, 2025, President Donald Trump made a historic declaration he named Liberation Day. He announced a universal tariff of 10% on all imported goods and imposed high tariffs of up to 50% on specific countries. The legal basis for this action was the International Emergency Economic Powers Act (IEEPA). Originally intended to respond to terrorism or military threats, Trump repurposed the law by arguing that America’s trade deficit posed a threat to national security. It was highly unusual for an administration to frame tariffs within a foreign policy and national security context, and the repercussions for the international community were significant.

Trump framed the policy as one of “Reciprocal Tariffs.” His argument was that if Korea could export cars to the United States without paying a 25% tariff, while American cars were taxed at that rate abroad, then the system was fundamentally unfair. In reality, however, tariff rates were determined more by political posture than economic rationale. Most U.S. allies—including China, the European Union, Korea, and Canada—were subject to high tariffs, while countries with friendly ties to Trump, such as Saudi Arabia and Israel, were effectively exempt. In this way, U.S. tariffs became more than just trade policy; they functioned as political statements and instruments of external pressure.

Tariff rates are not just numbers. They have become a standard by which international relations determine who is a friend and who is a foe. The norms established under the WTO regime are no longer upheld, and the United States has begun advocating for a new trade order centered around bilateral negotiations. Trump’s tariff policy represents a worldview unto itself—one that redraws the lines of global division.

Trump’s tariff policy was also shocking in the way it was executed. Without congressional approval, he used the International Emergency Economic Powers Act (IEEPA) as a legal instrument to impose tariffs. Since its enactment in 1977, the law had been used mainly in limited areas such as freezing foreign assets, counterterrorism sanctions, and restricting transactions with hostile states. It was unprecedented to use it for broad-based tariff impositions covering the entirety of international trade.

Trump defined the trade deficit as a “threat to the nation” and included the correction of this deficit within the scope of presidential emergency powers. This move was not only unusual in an international legal context but also challenged the domestic constitutional order. Lower courts have already ruled the measure unconstitutional. The prevailing argument is that tariffs are essentially a form of taxation, which should be under congressional control, and that the executive branch does not have unlimited authority to impose them.

Nevertheless, the administration appealed the ruling, and the U.S. Supreme Court is set to hold oral arguments at the end of July 2025. This decision will serve as a critical test of the principle of separation of powers within the American political and economic system. The tariff controversy is not merely an issue of imports and exports—it is a battleground over the balance between legislative and executive power, and between authority and law.

Despite the legal uncertainty, Trump’s tariffs are producing results. By using them as leverage in negotiations, the United States has secured investment pledges and expanded market access from other countries. Japan agreed to lower tariffs in exchange for large-scale investments in the U.S., and Canada secured exemptions on certain steel products. Trump’s unpredictable negotiation tactics have ironically become an effective weapon in pressuring other countries.

Korea finds itself in one of the most difficult positions in this tariff war. While it is a military ally of the United States, economically, it is a trade partner heavily reliant on exports. The Trump administration announced that Korea would be subject to high tariffs of 25%, and the 90-day grace period is set to expire on August 1. The South Korean government is now making a final push to prevent the tariffs from taking effect.

Korea is looking to Japan’s negotiation model for guidance. Japan succeeded in reducing its tariff rate from 25% to 15% by agreeing to large-scale investments in the United States. Korea is also using investment plans by companies such as Samsung, Hyundai, and Hanwha as bargaining chips, and has proposed naval cooperation in the shipbuilding sector. This is an effort to leverage Korea’s technological capabilities and industrial base to secure preferential treatment as a key ally.

But the task is not easy. Trump has maintained a stance of “no exceptions for anyone” and believes that all allies should contribute more to the United States. This is not just an economic negotiation—it is a test of whether a country is willing to align with “America First.” As Korea’s options dwindle, the government is deploying a comprehensive strategy involving national security, investment, and industrial diplomacy to avoid a tariff bomb.

Meanwhile, public sentiment is growing colder. Favorability toward the United States has dropped significantly compared to 2024, and voices calling for “self-reliance instead of dependence” are growing louder amid issues such as tariff negotiations, defense cost-sharing, and the semiconductor alliance. Korea is now being tested both in terms of diplomatic flexibility and industrial resilience.

Trump’s tariff policy does more than strain bilateral relations—it shakes the foundations of the global order. The most immediate shock has been to global supply chains. With the imposition of high tariffs by the United States, companies have opted for complex routes that go from China to Vietnam and then to Korea. As instances of so-called “transshipment” increase, the United States has ramped up investigations and regulatory oversight of these supply routes.

As a result, multinational corporations are reorganizing their global supply chains. China-centered production systems are weakening, and there is a clear trend toward diversification into Southeast Asia, India, and Mexico. At the same time, ASEAN countries are strengthening trade integration, and Korea is establishing logistics hubs and assembly facilities in the region. This provides new opportunities but also demands a significant transformation of the existing industrial ecosystem.

Another major shift is the weakening of the WTO regime. In the past, trade disputes were settled through WTO arbitration, but Trump has bypassed these mechanisms and handled all issues through bilateral negotiations. Other countries have begun to follow suit. Canada is strengthening its bilateral negotiations with the U.S., the European Union is considering retaliatory tariffs, and China is accelerating its shift toward a domestic consumption–driven economy. The retreat of multilateralism and the rise of bilateralism signal a new chapter in the global economy.

Tariffs are ultimately passed on to consumers. While companies are currently holding out by relying on existing inventories, that buffer has clear limits. Starting in 2026, a significant rise in prices is anticipated. In the U.S., prices for home appliances, clothing, and copper are already on the rise, and Korea is also seeing increased import costs for certain products.

But inflation is not the only concern. Tariffs are reducing exports, eroding corporate profitability, and weakening employment. The United States is facing both consumer spending slowdowns and rising production costs, leading to signs of stagflation. In Korea, the economy is projected to grow at just over 1% in 2026, and inflation may exceed 3%.

The economy is interconnected. A single measure like tariffs can trigger ripple effects across investment, consumption, exports, and employment, shaking the entire rhythm of the global economy. Trump’s tariff policy may deliver short-term political gains, but the price will be shared by the world over the years to come.