U.S. President Donald Trump announced that he would impose a 100% tariff on semiconductors produced abroad, while the Korean government is maintaining a cautious stance. Although it secured 'most-favored-nation status' for semiconductors in trade negotiations, it is uncertain how far the scope of tariff imposition will apply, and it is still unclear how much tariff will be applied to exports that pass through a third country.
On the 6th (local time), President Trump announced a plan for Apple's investment in facilities in the U.S. in the Oval Office, stating, "I will impose a 100% tariff on semiconductors." He added, "However, I will exempt corporations that are currently producing or have promised to produce in the U.S. from tariffs, regardless of the size of employment or production." If this statement holds true, Samsung Electronics and SK hynix, which are building semiconductor factories in Texas and Indiana, respectively, are likely to be excluded from tariffs.
Even if tariffs are imposed, the likelihood of Korea facing a 100% tariff appears low. Last month, in trade negotiations, Korea secured most-favored-nation status from the U.S. for the semiconductor and pharmaceutical sectors. In this case, Korea will receive the lowest tariff rate applied to other countries. Currently, the agreed-upon semiconductor tariff between the U.S. and the EU is around 15%. If the Korea-U.S. trade agreement remains as originally planned, Korea will also have a tariff rate similar to that of the EU.
Although semiconductors are the second-largest export item to the U.S., the fact that the share of Korea's semiconductor exports in total exports to the U.S. is below 10% also mitigates risk. Last year, Korea's semiconductor exports to the U.S. amounted to $10.7 billion, accounting for approximately 8% of the total exports to the U.S., which totaled $127.8 billion.
Kim Yang-pyeong, a senior researcher at the Korea Institute for Industrial Economics & Trade (KIET), noted, "Recently, the U.S. has increased imports of Korean semiconductors for building central government and school servers, but the weakening manufacturing base in the U.S. may lead to a further decrease in imports." He further analyzed, "This measure could be interpreted as a political signal that the Biden administration will eliminate subsidies for semiconductor factories, suggesting it will be just a passing shower."
However, it is still early to feel reassured. If the U.S. expands the tariff imposition to not just semiconductors but also semiconductor derivatives, the damage could grow to an unpredictable level.
Currently, the Office of the United States Trade Representative (USTR) is conducting an investigation under Section 232 of the Trade Expansion Act to assess the impact of semiconductor and semiconductor manufacturing equipment and semiconductor derivative imports on national security. Semiconductor derivatives could include electronic products or appliances. In particular, the tariff rates imposed on smartphones and other products completed in third countries such as Vietnam are also variables.
A government official explained, "At present, there is only President Trump's statement, and there are no specific details, making it difficult for the government to respond," and stated, "We cannot even determine whether the tariff imposition will be limited to semiconductors or expanded to derivatives."
Meanwhile, experts predicted that imposing tariffs on semiconductors and derivatives could have a devastating impact on the U.S. economy, making extensive imposition difficult. Researcher Kim stated, "If tariffs are imposed on derivatives, virtually every item will become subject to tariffs," adding that "this could lead to increased domestic product prices and decreased demand, ultimately adversely affecting the U.S. economy."
An Ki-hyun, executive director of the Semiconductor Industry Association, said, "If a 100% tariff is imposed on semiconductors and related products, it will actually be U.S. corporations that suffer first," asserting that "it will not be easy for the Trump administration to actually implement plans for item-specific tariffs on semiconductors and derivatives."