Seoul: South Korean companies are grappling with uncertainties stemming from U.S. President Donald Trump's trade policies, which have created a challenging environment for overseas projects and investments. During his first 100 days in office, Trump implemented a series of executive orders and tariffs to reduce the U.S. trade deficit and boost domestic manufacturing, leading to rapid and unpredictable policy changes.
According to Yonhap News Agency, Trump's introduction of country-specific reciprocal tariffs of up to 50 percent, alongside a 90-day implementation pause, has injected significant uncertainty into global markets. South Korean firms, which heavily rely on U.S. exports, are facing difficulties adapting to the volatile trade environment. Although some sectors like cars, semiconductors, and pharmaceuticals are exempt from the reciprocal tariff, they are still subject to other sectoral duties.
To counter the potential fallout, several South Korean companies have considered relocating production or scaling back output. However, experts caution that the unpredictable nature of U.S. trade policy makes long-term planning both difficult and costly. Cho Seong-dae of the Korea International Trade Association (KITA) noted that many decisions are effectively on hold as companies await further announcements from Trump.
When the White House threatened tariffs on Mexican imports, companies such as Kia Corp., Samsung Electronics Co., and LG Electronics Inc. considered moving production from Mexico to the U.S. or increasing output elsewhere. These plans were shelved after Mexico was excluded from the tariffs. Meanwhile, Hyundai Motor Group announced a $21 billion investment in the U.S. over the next three years to boost American production, though it could not fully avoid sectoral tariffs on imported vehicles.
As new trade negotiations between Seoul and Washington commence, South Korea seeks exemptions from reciprocal and sector-specific tariffs by proposing a comprehensive "package deal." Many South Korean firms have adopted a cautious approach, developing contingency strategies amid ongoing talks.
Samsung Electronics, with its extensive global production network, remains confident in navigating the shifting trade landscape. Yong Seok-woo, president of Samsung's visual display business, emphasized strategic production allocation to overcome challenges. In the semiconductor sector, where Trump has hinted at new tariffs, Korean chipmakers remain wary, particularly about investments under the U.S. CHIPS Act.
Concerns also extend to subsidies for investments already committed in the U.S. Samsung Electronics and SK hynix have secured significant subsidies for their investments in Texas and Indiana, respectively, yet Trump's skepticism about such subsidies adds further uncertainty.
Experts warn that the real impact of the tariffs will become evident in the second quarter as companies deplete their current inventories and need to replenish supplies. Cho from KITA suggests now is the time for companies to develop practical, long-term solutions to brace for the impending challenges.