With just nearly two months into the second term of the Donald Trump administration, U.S. trading partners, notwithstanding allies and free trade agreement partners, have been staggering from a series of tariff measures and plans announced by the U.S. government. The new keyword for U.S. trade policy now appears to be "reciprocity," which signals a sharp departure from the multilateral rules-based principle of "nondiscrimination."

While the World Trade Organization (WTO) has accomplished a lot in lowering tariffs among member countries based on the "most favored nation (MFN)" treatment obligation, member countries are actually bound to MFN tariff levels, which can be different for each country depending on their level of economic development. There also remains a lot to achieve on a multilateral basis, including the reduction of nontariff trade barriers that normally take the form of domestic regulations or border measures that discriminate against foreign goods and services.

Among its many structural deficiencies, the 70-year-old WTO is being criticized for its failure to make member countries bring WTO tariff commitments in line with their level of economic development. For less-developed country (LDC) members, the WTO provides various exceptions and special treatment provisions as leeway for self-declared LDC members to retain "policy space" from market opening and trade liberalization commitments.

However, the actual tariff system in the WTO operates in a more subtle way, under which all member countries are allowed to use both "bound rates" and "applied rates" for tariff levels. Due to the MFN obligation, WTO members generally commit to higher bound rates which can protect them against violating the rules, while actually using lower applied rates when necessary. In practice, the promised bound rates of LDC members are generally far higher than those of developed country members. But in terms of applied tariff rates, both developed and LDC members similarly apply lower rates, and the difference in applied tariff rates is generally not as large as compared to the difference in bound rates among developed and LDC members.

Trump's announcement of the U.S. government's plan to impose "reciprocal tariffs" has triggered renewed attention on WTO tariff commitments. This is especially so, as Trump made remarks during his joint address to the U.S. Congress that Korea levies four times higher tariff rates than the U.S. does against Korea. While the source of the incorrect fact is unknown, it is presumed that such remarks may have been made based on simply citing the average MFN tariff bound rates since Korea's average MFN bound tariff rate is 13.4 percent while that of the U.S. is 3.3 percent (approximately four times higher).

However, as explained previously, these figures are WTO MFN bound rates, which are generally far higher than the actual applied tariff rates. Furthermore, Korea and the U.S. have agreed to reciprocally apply preferential tariff rates under the Korea-U.S. Free Trade Agreement, which has practically eliminated tariff rates on almost all traded goods between the two countries.

It remains to be seen whether the U.S. administration will be able to implement the "reciprocal tariffs" as ordered by Trump by April 2. Many experts are skeptical about the feasibility of the plan, which includes calculating tariff equivalents for not only all trade goods but also subsidies and other nontariff barriers that are deemed to be unfair and discriminatory to U.S. businesses.

This is an especially demanding task considering the current lack of workers within the U.S. government due to government transition and streamlining efforts. The Office of the United States Trade Representative (USTR) may primarily refer to its National Trade Estimate (NTE) Report on foreign trade barriers, which the U.S. government has been publishing every year since 1985.

In the 2024 NTE Report, 59 markets have been covered as significant foreign trade barriers, while generally more than 64 markets have been covered by the NTE Report.

As with other U.S. trading partners, Korea was covered by the USTR NTE Report, and the main trade issues covered include regulations on chemicals, agricultural biotechnology, government procurement in information and communications technology equipment, location-based data requirements and motor vehicle regulations. The 2024 report also mentions that Korean duties on most U.S. goods have been eliminated as of 2021, while Korean tariffs on the majority of U.S. agricultural products have also been eliminated under the Korea-U.S. FTA.

The first NTE Report under the second Trump administration, which will be released by the end of March, is expected to serve as the basis for calculating "reciprocal tariffs" against major trading partners. The actual implementation of the reciprocal tariffs, however, will not be an easy task, notwithstanding the negative impact increased import tariffs will have on the U.S. economy as a whole.

Lee Hyo-young is an associate professor at the Korea National Diplomatic Academy (KNDA), teaching international trade and diplomacy. Before joining the KNDA in March 2017, she worked as a research fellow at the Korea Institute for International Economic Policy, during which she also worked as assistant secretary for trade, industry and energy at the presidential office from 2014 to 2015.