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South Korean authorities have uncovered illegal export activities where foreign products — primarily from China — were fraudulently marked as South Korean goods to bypass U.S. tariffs. The Korea Customs Service (KCS) reported that it discovered 29.5 billion won ($20.81 million) worth of violations related to country-of-origin markings in just the first quarter of 2025. These violations were largely aimed at U.S.-bound shipments, accounting for 97% of the total.
Rising Concerns Over Trade Practices and Country-of-Origin Manipulation
The findings come amid a growing trend of illegally marked goods attempting to evade tariffs imposed under U.S. President Donald Trump’s administration. Trump’s trade policies, which heavily target China, have led to the imposition of hefty tariffs on Chinese imports.
South Korea, as a key U.S. ally with a free trade agreement (FTA) with the U.S., has become a gateway for China and other countries seeking to bypass these tariffs.
In fact, during Trump’s first presidency, South Korean authorities observed a rise in disguised export attempts. The KCS now expects a similar upsurge in attempts to circumvent U.S. tariffs during Trump’s second term. As part of a preemptive effort, authorities have ramped up investigations to identify and prevent such activities.
Targeted Sectors and Notable Violations
Some of the violations discovered by the KCS include:
- Cathode materials for batteries: Products imported from China, falsely marked as South Korean, were shipped to the U.S. to avoid tariffs that had already been set by January 2025.
- Surveillance cameras: Components imported from China were assembled in South Korea and shipped with incorrect origin markings, aiming to bypass U.S. restrictions on Chinese communications technology.
These attempts were often driven by the intense tariffs imposed by the U.S., which, after ongoing trade conflicts, reached 145% on Chinese goods.
Joint Efforts Between South Korea and the U.S. to Tackle Trade Violations
To address this increasing issue, South Korea’s customs officials have held meetings with their U.S. counterparts to discuss joint investigations. They plan to intensify efforts to crack down on fraudulent country-of-origin practices and protect domestic businesses from such illicit activities.
South Korea’s Tariffs and the Growing China-U.S. Trade War
In March 2025, the U.S. imposed 25% tariffs on South Korean goods but later suspended them for three months. As a result, the China-U.S. trade war continues to escalate, with economists warning of further disruptions.
The trade conflict between China and the U.S. has led to a severing of trade ties between the world’s two largest economies, creating significant ripple effects for countries like South Korea. South Korean businesses, particularly those in export-heavy sectors, are facing mounting pressure from both the U.S. and China.
A Task Force to Combat Illicit Exports
In response to these challenges, the Korea Customs Service (KCS) has formed a special task force to tackle illegal export attempts. Authorities are focusing on specific measures to safeguard South Korean exports and protect domestic industries from being exploited in trade disputes.
Impact on Future Trade Relations and Prosecution Efforts
As part of its crackdown, South Korean authorities have vowed to refer the cases of fraudulent export activity to prosecutors for legal action. These violations are likely to increase tensions between South Korea and the U.S., especially as both countries work to align on trade regulations and ensure compliance with global standards.
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