Seoul: Samsung Electronics Co. and LG Electronics Inc. are urgently evaluating the ramifications of the U.S. government's decision to add home appliances to the list of derivatives subjected to a 50 percent steel tariff, as reported by industry sources on Friday.

According to Yonhap News Agency, the U.S. Commerce Department has released a notice on the Federal Register indicating that the tariff will apply to various home appliance imports, including refrigerators and washing machines, based on the steel content's value in each item. This measure is set to take effect on June 23.

While Samsung and LG have manufacturing plants in the United States, these facilities mainly produce washing machines, with a significant portion of other key products manufactured in countries such as South Korea, Mexico, and Vietnam. This leaves the companies exposed to the increased tariffs.

"We are closely analyzing the impact of the latest U.S. action, particularly within the relevant business divisions," an industry official said anonymously. "We are exploring a range of possible responses."

The high steel content in home appliances is expected to increase production costs and reduce profit margins. LG had previously hinted at potential price hikes during its first-quarter earnings conference call. Hur Joon-young, an economics professor at Sogang University, noted that if tariffs raise prices, Korean firms might lose competitiveness compared to U.S. manufacturers and may need to consider relocating more production to the U.S.

In response, both Samsung and LG are reassessing their global manufacturing strategies. Samsung plans to expand premium offerings and adjust production sites to lessen tariff exposure. Kim Dae-jong, a business professor at Sejong University, suggested that increasing U.S. production volume might be the most effective solution to avoid the tariff, alongside trade negotiations for tariff relief by the South Korean government.

LG Electronics is reportedly looking into gradually shifting the production of washers and dryers to its Tennessee plant to increase the proportion of U.S.-bound appliance sales covered by local manufacturing. LG CEO Cho Joo-wan previously stated that establishing a manufacturing base in the U.S. would be a "last resort," preferring to first explore other strategies, such as altering production locations or raising prices, to address the tariff challenge.