Korean industries brace for uncertainties unde... > 경제기사 | economics

With former U.S. President Donald Trump’s win in the 2024 U.S. elections, most South Korean industries are preparing for a major overhaul of their U.S. business strategies.

Samsung Electronics Co. is open to adjusting its strategy to align with policy changes from a second Trump administration, which could include withdrawal of subsidies promised under the Creating Helpful Incentives to Produce Semiconductors CHIPS and Science Act. Amid the heightened policy uncertainty, Samsung may hesitate to proceed with large-scale investments. The company is currently constructing a $17 billion 4-nanometer foundry plant in Taylor, Texas, with a total of $6.4 billion in subsidies projected from the Biden administration, but subsidy uncertainty has reportedly delayed the plant’s production timeline.


While semiconductor exports to the United States are tariff-free under the Korea-U.S. Free Trade Agreement FTA, the Trump administration might apply Section 232 of the Trade Expansion Act for national security or Section 301 for unfair trade practices. However, Jung Eun-mi, a senior researcher at the Korea Institute for Industrial Economics amp; Trade KIET, noted that substantial reductions in subsidies or tax credits are unlikely, given that the CHIPS Act originated during Trump’s first term.

Hyundai Motor Group is also reconsidering its plan to manufacture electric vehicles EVs in the United States. Although it recently began trial production at its dedicated EV plant in Georgia, the company could shift focus to other vehicle types, including hybrids. Lee Hang-koo, head of the Jeonbuk Institute of Automotive Convergence Technology, indicated that Hyundai may need to adjust production across all its global plants, not just those in the U.S. Hyundai Steel, which supplies steel sheets for EVs, recently began operations at its EV-specific steel sheet processing plant in Georgia to comply with the Inflation Reduction Act IRA, but subsidies for the Georgia plant could also face cuts.

A further risk is Trump’s proposed universal tariffs. KIET Senior Researcher Kim Kyoung-you predicted that Korea could be targeted under Trump’s protectionist policies, which would limit options for Korean companies, requiring them to boost U.S.-based production or reroute exports to other countries.

Battery manufacturers are also closely watching the Advanced Manufacturing Production Credit AMPC, established under the IRA, as a key profitability factor. SK on Co., preparing to start operations at new plants in Kentucky and Tennessee in 2025, could see profits waver if AMPC support diminishes. Despite potential subsidy restrictions, SK on plans to expand its North American operations. “Even with Trump back in office, the IRA is unlikely to be fully repealed. We aim to enhance our U.S. capacity to maintain an edge over Chinese batteries,” a company official stated.

Conversely, a stronger anti-China stance in Trump’s second term could benefit Korean battery companies. Jo Hyung-jin, head of the Strategy Consulting group at Kearney Korea LLC, anticipated fewer extreme policy changes this time, although “China-bashing” policies could still intensify.

In defense, a second Trump term could expand export markets for Korean defense firms, as European nations facing the Russia-Ukraine conflict consider boosting defense spending. KIET researcher Jang Won-joon projected that if Europe raises defense budgets to 3 percent of GDP, up to $500 billion in additional defense spending could be expected.

The Korea International Trade Association KITA released a report on the 2024 U.S. elections and trade environment on Wednesday, suggesting that increased U.S. pressure on China could give Korean firms an edge as they compete with Chinese products. KITA noted that while universal tariffs would impact all imports to the United States, the negative effects on Korean products could vary depending on sector competitiveness.

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