Seoul: South Korean businesses with operations in Canada and Mexico are preparing for the impact of U.S. President Donald Trump's plan to impose tariffs on goods from the two countries. According to industry observers, the tariffs, which will be set at 25 percent, are set to take effect, raising concerns among South Korean firms about potential disruptions.
According to Yonhap News Agency, South Korea's bilateral trade with Canada and Mexico reached US$14.62 billion and $19.8 billion, respectively, in 2023. Local corporate data firm Korea CXO Institute reports that 25 South Korean conglomerates operated a total of 201 subsidiaries in these countries at the end of 2024. This includes 110 subsidiaries in Canada and 91 in Mexico, with Samsung Group and Hyundai Motor Group having a significant presence.
Mexico has been a key export hub for South Korean companies due to low labor costs and the benefits of the U.S.-Mexico-Canada Agreement (USMCA). In 2023, South Korea ranked as the 11th largest foreign direct investor in Mexico. Major South Korean firms like Samsung Electronics, LG Electronics, and Kia Corp. have substantial manufacturing operations in the country.
The Korea CXO Institute anticipates that the tariffs could diminish the price competitiveness of Korean products such as vehicles, car batteries, and home appliances in the U.S. market. An official from the institute noted the challenges of relocating production facilities to the U.S. in the short term, suggesting companies may need to boost U.S. production or diversify their markets.
Further complicating matters is the U.S. administration's plan to impose sectoral tariffs on automobiles and semiconductors starting in April. This move could impact major South Korean companies like Samsung Electronics and Hyundai Motor Group, which have operations in the U.S.
An official from Kia's Mexican unit mentioned plans to adapt by coordinating with U.S. and Mexican policies to minimize risks. Meanwhile, Seoul's Industry Minister Ahn Duk-geun has requested the U.S. government to exempt South Korea from the new tariffs during recent meetings with U.S. officials. Ahn emphasized that South Korea seeks tariff exemptions or, at the very least, a fair position relative to other countries.