South Korea's trade ministry has officially responded to the Trump administration's new trade policy. The policy imposes a 25% tariff on advanced computing chips. The country's trade minister stated that these tariffs will have a limited impact on South Korean tech giants for now.
Limited Immediate Impact on Korean Exports
Trade Minister Yeo Han-koo explained the reasoning behind this assessment. He noted that the current US measures focus primarily on logic chips. South Korean companies mainly export memory chips, which are currently excluded from the tariffs.
"Since the memory chips that South Korean companies mainly export are currently excluded, the immediate impact is expected to be limited," Minister Yeo said. This exclusion cushions the immediate financial blow to South Korea's semiconductor industry.
Trump's Executive Order Targets Specific Chips
President Donald Trump signed the executive order on January 14. The order specifically targets high-end AI processors. Notable examples include Nvidia's H200 and AMD's MI325X chips.
The White House has implemented certain exemptions within the policy. These exemptions apply to US data centers, startups, and civil industrial applications. The goal is to prevent a total shock to the American AI sector while still implementing protective measures.
Warning About Future Expansion
Minister Yeo issued a cautionary note despite the current limited impact. He warned that "it is not yet time to be reassured." The minister cited a looming threat he called "Phase 2" expansion.
This potential second phase could eventually pull more general-purpose semiconductors into the tariff net. Such an expansion would significantly increase the policy's impact on South Korean exports.
US Commerce Secretary Issues Stark Ultimatum
Meanwhile, US Commerce Secretary Howard Lutnick delivered a much harsher message. Speaking at a Micron plant groundbreaking in New York, Lutnick issued a stark ultimatum to foreign manufacturers.
He stated that South Korean and Taiwanese chipmakers face potential tariffs as high as 100%. This would apply to companies that fail to invest in American-based production facilities.
This aggressive stance contrasts sharply with South Korea's more optimistic assessment of the current situation. The 100% tariff threat represents a significant escalation in pressure on foreign semiconductor manufacturers.
Broader Strategy Behind the Tariffs
The tariff strategy is reportedly part of a broader Section 232 investigation. This investigation aims to incentivize domestic manufacturing within the United States. A key goal is reducing American reliance on the East Asian semiconductor supply chain.
Major South Korean chipmakers have already made substantial commitments to US production. Both Samsung and SK Hynix have pledged billions of dollars toward building facilities in the United States.
The threat of 100% duties serves as a high-pressure tactic. It aims to ensure these commitments are accelerated and fully realized according to American timelines.
South Korean Government Response
The South Korean government confirmed it is working closely with industry leaders. Together, they are navigating these shifting trade benchmarks. The benchmarks are specifically designed to penalize companies that keep their most advanced production lines on foreign soil.
This collaborative approach between government and industry reflects the strategic importance of semiconductors to South Korea's economy. The sector represents a critical component of the country's export-driven economic model.
The situation remains fluid as both countries adjust to the new trade landscape. South Korean officials continue to monitor developments while preparing for potential future expansions of the tariff policy.
