-->
In his first 100 days of office, US President Donald Trump has unleashed a wave of executive orders and tariffs designed to reduce the country’s trade deficit and stimulate domestic manufacturing.
However, the abrupt and unpredictable nature of these changes has left South Korean companies hesitant to commit to overseas investments and long-term projects.
Reciprocal Tariffs Spark Global Market Uncertainty
Trump introduced country-specific reciprocal tariffs of up to 50 percent, alongside a 90-day implementation delay, causing significant unease in global markets, according to Yonhap News Agency.
These unpredictable moves have disrupted planning for many South Korean exporters, who rely heavily on access to the US market.
Initially, the president threatened to impose a 25 percent tariff on all imports from Mexico and Canada two countries that currently enjoy tariff-free trade with the United States under the USMCA.
He later withdrew those threats, but not before creating widespread concern among international stakeholders.
South Korean Firms Scramble To Respond
In April, Trump launched a 10 percent baseline import duty on goods from all countries and imposed a 25 percent reciprocal tariff on products from nations with trade surpluses with the US, including South Korea.
Also Read: Yemen’s Houthis Claim Responsibility For Missile Attack On Israel
While sectors such as automobiles, semiconductors, and pharmaceuticals were partially exempt from the new measures, they remain subject to existing or upcoming sector-specific duties.
South Korean businesses have found it increasingly difficult to develop long-term strategies in such a volatile environment.
In response, some firms have begun exploring options like relocating production or reducing output to limit potential exposure.
Experts Warn Of Long-Term Planning Risks
Trade experts argue that these short-term responses carry limited effectiveness.
Cho Seong-dae, head of the trade policy research office at the Korea International Trade Association (KITA), highlighted the challenges companies face.
“Companies will seek ways to reduce costs by relocating production facilities or adjusting shipments to the US,” said Cho.
“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.”
Mexican Production Plans Put On Ice
Earlier this year, Trump’s threat to impose tariffs on Mexican imports prompted South Korean firms such as Kia, Samsung Electronics, and LG Electronics to consider shifting production from Mexico to the United States or other regions.
However, after the White House dropped the proposed tariffs and exempted Mexico from the reciprocal measures, those plans were largely shelved.
Hyundai Commits to US Investment
Despite the uncertainty, Hyundai Motor Group recently announced a US$21 billion investment in its US operations over the next three years to boost domestic production.
The move underscores the automaker’s commitment to maintaining its U.S. market presence, even as it continues to face sectoral tariffs on imported vehicles.
Last year, Hyundai and Kia sold a combined 1.7 million vehicles in the United States, including 1 million cars manufactured in South Korea.
Trade Talks Underway Between Seoul And Washington
Meanwhile, South Korea and the United States began fresh trade negotiations last week. Seoul is actively seeking exemptions from both reciprocal and sector-specific tariffs.
As part of the talks, South Korea proposed a comprehensive “package deal” addressing multiple sectors in an effort to secure more favourable terms.
Firms Remain Cautious But Prepare Contingency Plans
As discussions continue, many South Korean companies have adopted a cautious, wait-and-see approach. However, they are also developing contingency plans to adapt quickly if needed.
Samsung Electronics, which operates a broad global manufacturing network, expressed confidence in navigating the challenges.
Yong Seok-woo, president and head of Samsung’s visual display division, spoke at a press conference earlier this month.
“The impact of the new reciprocal tariffs is slim, but we are monitoring the situation closely as U.S. trade policies continue to evolve,” he said.
“With 10 production bases globally, we plan to overcome these challenges through strategic production allocation.”
Semiconductor Sector Watches Closely
In the semiconductor industry, uncertainty remains high. Trump has hinted at a new round of tariffs targeting the sector, leaving chipmakers in a holding pattern.
One official from a major Korean chipmaker admitted, “We can’t do much at this point. We need to wait for Trump’s next announcement before discussing our strategy.”
Concerns Over US CHIPS Act Investments
Adding to the tension, South Korean firms are growing increasingly concerned about investments already committed under the US CHIPS Act.
With policy direction still unclear, companies fear they may face penalties or changing requirements even after capital has been deployed.
To read more such news, download Bharat Express news apps
