S. Korean Companies Trying to Respond Quickly to Regime Change in US

South Korean enterprises’ concerns are rising over the Donald Trump administration’s trade protectionism. Major South Korean companies such as Samsung, LG and Hyundai Motor Company are considering the establishment of manufacturing facilities in the United States to protect themselves from the new U.S. government’s border taxes and import tariffs.

The KORUS FTA is still effective and their products manufactured in South Korea can avoid tariff barriers for now. However, things are different for those produced in Mexico and Vietnam. During his election campaign, the new U.S. President declared that he would raise the tariff applied to products exported from Mexico to the U.S. from 0% to 35% so that more factories can be built in his country.

Under the circumstances, Samsung Electronics is expected to reveal its plan on additional investment in Harman in the near future along with employment of local workers for the automotive electronics manufacturer it recently acquired. This is likely to be a response to the U.S. government’s top-priority policy for the stability of jobs in the U.S. At present, the number of Harman employees is approximately 30,000 across the world. Samsung Electronics acquired the company late last year for US$8 billion. Samsung Electronics is also considering the establishment of new factories in the U.S. to produce more TV sets there instead of Tijuana, Mexico.

LG Electronics, which exports high-end washing machines and refrigerators from South Korea to the U.S. and less expensive washing machines and refrigerators from Mexico and Vietnam to the U.S., is mulling over doing the same thing. “We may build washing machine manufacturing facilities in the United States to avoid tariffs and the decision will be made before the end of the first half of this year,” it explained at CES 2017.

The Hyundai Motor Group recently announced that it would invest US$3.1 billion in the United States for five years to come, adding that it can build manufacturing facilities there as the case may be. SeAH Steel Corporation, in the meantime, acquired two oil country tubular goods suppliers in Houston in November last year immediately after the election of the new U.S. President. The steel company recently decided to invest US$100 million in the U.S., too.