South Korea’s Trade Minister Yeo Han-koo expressed concerns on July 14, over the potential impact of US tariffs on semiconductors, a key export sector.

The government is addressing these duties, which could disrupt global supply chains and affect major companies like Samsung Electronics and SK Hynix.

A proposal is being prepared to tackle both chip tariffs and broader duties set to take effect on August 1.

Yeo emphasized the need for extensive consultations with ministries, stakeholders, and the National Assembly.

A trip to Washington is planned before the implementation date.

South Korea is pushing for a comprehensive trade deal to stabilize conditions and reduce existing tariffs on industries like automobiles and steel.

With exports making up over 40% of the GDP, securing favorable terms is crucial.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ South Korea’s economic vulnerability to chip tariffs

South Korea’s economy faces significant risk from semiconductor tariffs due to its heavy export dependence and industry concentration.

Semiconductors account for approximately 20% of South Korea’s total exports, making the sector highly important to the nation’s economic health 1.

This vulnerability is heightened by the fact that exports constitute more than 40% of South Korea’s total GDP, creating a direct link between trade policies and national economic performance.

The potential 25% tariff announced for South Korean imports would particularly impact its auto and semiconductor industries. South Korea exported $34.74 billion worth of automobiles to the U.S. last year alone 2.

Major Korean chipmakers Samsung Electronics and SK Hynix would face significant challenges from these tariffs, potentially disrupting their global market positions and the broader semiconductor supply chain.

Previous trade tensions, like the 2019 South Korea-Japan dispute over semiconductor manufacturing chemicals, showed how quickly supply chain disruptions can threaten Korean chip production, with analysts estimating that dispute could have reduced production by up to 10% 3.