Seoul, April 27
In his first 100 days in office, US President Donald Trump has issued a wave of executive orders and tariffs aimed at reducing his country's trade deficit and boosting domestic manufacturing. But the rapid and unpredictable changes in his policies have left South Korean companies hesitant to make critical decisions on overseas projects and investments.
Trump's shifting policies, such as country-specific reciprocal tariffs of up to 50 percent and a 90-day implementation pause, have injected significant uncertainty into global markets, reports Yonhap news agency.
Many South Korean firms, heavily reliant on U.S. exports, are now grappling with how to adapt in an increasingly volatile trade environment.
Trump, who started his second term on Jan. 20, initially threatened 25 percent tariffs on all imports from Mexico and Canada, which have tariff-free access to the United States under the U.S.-Mexico-Canada Agreement (USMCA), but later lifted the duties.
In April, Trump announced his long-promised reciprocal tariffs on goods from countries that run trade surpluses with the United States, along with a 10 percent baseline duty on imports from all countries. South Korean products were subject to a 25 percent reciprocal tariff.
Certain sectors, including cars, semiconductors and pharmaceuticals, were exempted from the reciprocal tariff, but are subject to sectoral duties already in place or set to be introduced.
For many South Korean exporters, the lack of consistency in trade policy of the world's largest economy has created major strategic challenges.
To mitigate potential fallout, several firms have already explored relocating production or scaling back output.
Yet experts warn that such responses have limitations. The uncertainty around future policy changes, they say, makes long-term planning difficult and expensive.
"Companies will seek ways to reduce costs by relocating production facilities or adjusting shipments to the U.S.," said Cho Seong-dae, head of the trade policy research office at the Korea International Trade Association (KITA).
"But since it's nearly impossible to predict U.S. trade policy, many decisions are effectively on hold. Everyone is waiting to see what Trump will say next."
When the White House threatened tariffs on Mexican imports, South Korean companies with manufacturing bases in Mexico, including Kia Corp., Samsung Electronics Co. and LG Electronics Inc., had announced plans to move their Mexican production to the U.S. or increase output elsewhere.
Those plans were later shelved after tariffs on Mexico were waived and the country was excluded from reciprocal tariffs.
Hyundai Motor Group, South Korea's largest automaker recently announced a plan to invest US$21 billion in the U.S. over the next three years in an effort to ramp up American production.
Despite the move, the company could not completely avoid the sectoral tariffs on imported vehicles.
Hyundai Motor Co. and Kia sold a combined 1.7 million vehicles in the U.S. last year, including 1 million cars manufactured in Korea.
Meanwhile, Seoul and Washington began new trade negotiations last week, with South Korea seeking exemptions from both reciprocal and sector-specific tariffs. South Korea proposed a comprehensive "package deal" addressing multiple sectors to secure more favorable terms.
Amid the ongoing talks, many South Korean companies have adopted a cautious, wait-and-see stance, even as they develop contingency strategies.
Samsung Electronics, whose businesses span semiconductors, home appliances and smartphones, has expressed confidence in navigating the shifting trade landscape thanks to its extensive global production network.
"The impact of the new reciprocal tariffs is slim, but we are monitoring the situation closely as U.S. trade policies continue to evolve," Yong Seok-woo, president and head of the visual display business at Samsung Electronics, said in a press conference earlier this month. "With 10 production bases globally, we plan to overcome these challenges through strategic production allocation."
In the semiconductor sector, where Trump has hinted at a new round of tariffs, South Korean chipmakers remain cautious.
"We can't do much at this point," said an official from a major Korean chipmaker. "We need to wait for Trump's next announcement before discussing our strategy."
Concerns are also growing around investments already committed under the U.S. CHIPS Act.
—IANS
— IANS
Reader Comments
This is exactly why businesses need stability. How can companies plan for the future when policies change every few months? 😕 The back-and-forth on Mexico tariffs shows how unpredictable this administration is.
As someone working in international trade, this article hits home. We've had to put three major projects on hold because of the uncertainty. The 25% reciprocal tariff on SK products is particularly concerning for SMEs.
While I understand the need for fair trade, the constant policy shifts are hurting workers on both sides. My uncle works at a Kia plant in Georgia and they're all worried about job security now. There's got to be a better way!
The article could have explored more about how this affects consumer prices. These tariffs will eventually trickle down to higher costs for American buyers too. Short-term wins might lead to long-term pain for everyone.
Samsung's global network gives them flexibility, but smaller companies don't have that luxury. This policy seems to favor mega-corporations while squeezing smaller players. 😟
Respectful criticism: The article focuses heavily on Korean perspectives but doesn't sufficiently explain the US administration's rationale. A more balanced approach would help readers understand both sides of this complex issue.
The semiconductor industry comment says it all - "We can't do much at this point." When billion-dollar companies are paralyzed by uncertainty, that's a red flag for the global economy.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.