The U.S. government is expected to benefit Samsung Electronics smartphones, which are exempt from tariffs, in the short term as it imposes additional tariffs on Chinese products. This is because most of rival Apple’s iPhone units are produced in China. However, it seems unlikely that this advantageous situation will last long, given President Donald Trump's policy, which campaigned on imposing tariffs on all countries. Analysts suggest that if the Trump administration, which prioritizes 'America first,' chooses to exempt tariffs on Chinese iPhones while imposing them only on Samsung smartphones, the market share of Samsung Electronics smartphones in the U.S. could suffer a blow.
◇ Trump's tariff policy benefits Samsung in the short term
President Trump signed an executive order on Dec. 2 to impose a 25% tariff on products from Canada and Mexico and a 10% tariff on products from China starting from Dec. 4 (local time). This move is expected to work favorably for Samsung Electronics ahead of the U.S. launch of the 'Galaxy S25' on Dec. 7. Over 85% of Apple's iPhone units are manufactured in China, making price increases for the iPhone inevitable due to the new tariffs. As iPhone prices rise, the competitiveness of the Galaxy S25, which has its price frozen compared to its predecessor (Galaxy S24), is expected to be relatively strengthened.
The problem is that the favorable situation for Samsung Electronics may not last long. Given that President Trump has consistently advocated for the application of a universal tariff of more than 10% on all countries as a campaign promise, there is a possibility that additional tariffs could soon be expanded to other countries. About half of Samsung Electronics smartphones are produced in Vietnam, while the rest are made in India, Brazil, and South Korea. Products made in these locations are currently exported to the U.S. without tariffs.
Kyun-Won Kim, a distinguished professor of business administration at Sejong University, noted, 'It is only a matter of time before the Trump administration expands tariffs to Samsung's smartphone production countries. If the South Korean government does not intervene, Samsung must even reach out to the Trump administration and actively pursue lobbying that would contribute to Trump's achievements, such as building factories in the U.S.'
Even if Samsung smartphones lose their price competitiveness in the U.S. market due to changes in U.S. tariff policy, it will be challenging to lower prices. An industry insider stated, 'Recently, we have seen an increase in component costs by integrating Qualcomm application processors (AP) in all Galaxy S25 models instead of our own Exynos. However, we did not reflect this in the product prices,' adding, 'Even if tariffs are imposed in the future, there seems to be no room to reduce product prices. If we forcefully lower prices, it will worsen profitability, and if we remain stagnant, we will face poor sales performance.'
◇ Samsung's fate depends on Trump… potential adverse effects if only iPhones are exempt from tariffs
A more significant adverse factor for Samsung Electronics is the exemption of tariffs on iPhones produced in China. In December, U.S. investment firm Deepwater Asset Management stated, 'Apple and Tesla will be exempted from Trump's import tariffs on China,' explaining that 'President Trump does not want either Tesla to lose to BYD or Apple to lose to Samsung.'
In the past, Trump has set a precedent by exempting tariffs on Chinese iPhones. In 2019, during the first term of Trump's presidency, the U.S. government imposed a 25% tariff on Chinese products, but Apple CEO Tim Cook managed to negotiate an exemption for tariffs on Chinese iPhones after meeting with President Trump.
If Apple's price-freezing policy is added to this, Samsung smartphones' presence in the U.S. market is expected to become even narrower. Apple has kept prices frozen from the iPhone 14 in 2022 through the iPhone 16 in 2024. The industry believes that the iPhone 17 will likely also maintain its price. Apple's price freeze has influenced Samsung's previous decisions to keep product prices stable or only slightly increase certain model prices, which is why Samsung's smartphone sales have increased, but operating profit has declined. The revenue of Samsung Electronics' MX (Mobile Experience) and NW (Network) business divisions was 117.3 trillion won in the fourth quarter of last year, which is a 4% increase year-on-year, but operating profit fell by 22.2%.
According to Samsung Electronics, approximately 15% of its total smartphone sales come from the North American market. Based on Counterpoint Research, Samsung Electronics ranked second in the U.S. smartphone market (in terms of sales value) with a 23% market share, following Apple, which holds a 53% market share.
Professor Heung-Jong Kim of Korea University stated, 'Trump has imposed a 10% tariff on China, and he has warned that it could increase to 60% in the future, but I expect Apple's tariffs to be either waived or fixed below 10%. Samsung smartphones' market share in the U.S. may decline,' adding, 'It is not an exaggeration to say that the fate of Samsung Galaxy phones and Apple iPhones rests in Trump's hands.'