Trump’s Second Term Sparks Uncertainty for South Korean Industries

General


Seoul: As Donald Trump takes office for his second term as U.S. president, South Korean industries are closely watching for potential changes in Washington’s economic and trade policies, which could significantly impact their American businesses, industry observers said Tuesday.



According to Yonhap News Agency, concerns are growing over possible rollbacks of key U.S. legislation, such as the CHIPS and Science Act and the Inflation Reduction Act (IRA), though some sectors see potential for deeper collaboration with the United States, particularly in shipbuilding. South Korean tech giants Samsung Electronics Co. and SK hynix Inc. are grappling with uncertainties over the CHIPS Act, which provides subsidies to semiconductor companies.



Both companies have announced significant U.S. investments – Samsung with a $17 billion semiconductor plant in Texas and SK hynix with a $3.87 billion advanced packaging plant for AI memory chips in Indiana. They have secured pledges of $6.4 billion and $450 million, respectively, in grants from the U.S. for their investments. Despite bipartisan support for the CHIPS Act during its passage, industry experts caution that executive actions under the new Trump administration could alter its implementation, potentially affecting the subsidies.



Battery manufacturers are facing similar concerns under the IRA. Companies like LG Energy Solution Ltd. and SK On Co., which depend heavily on IRA tax credits, could see their margins squeezed if the legislation is scaled back. In the third quarter alone, LG Energy Solution received 466 billion won ($321.2 million) and SK On 60.8 billion won in IRA-related tax benefits. Without these benefits, both companies would effectively be operating at a loss.



Some industry watchers in South Korea believe the complete repeal of the IRA is unlikely, but suggest significant changes could be made to the eligibility requirements for battery company subsidies. Koo Ja-min, an attorney at Covington and Burling LLP, noted the IRA’s impact, explaining that it has driven over $100 billion in clean energy investments and created more than 100,000 jobs in Republican-led districts.



The automotive sector is also bracing for potential headwinds. Trump’s campaign hinted at rolling back federal mandates for electric vehicles (EVs), which could slow South Korean automakers’ EV exports. Hyundai Motor Group, holding the second-largest market share for EVs in the U.S. after Tesla, could face significant challenges in expanding its presence.



Following Trump’s reelection, Hyundai Motor Co. appointed Jose Munoz as its new CEO, marking the first time a foreign national has held the top post since its founding. Munoz’s appointment is seen as a strategic move to prepare for uncertain market conditions under Trump’s administration. Munoz expressed uncertainty regarding U.S. EV policy but remained confident in Hyundai’s ability to adapt.



Meanwhile, South Korea’s shipbuilding industry views Trump’s return to power as an opportunity. Trump expressed interest in collaborating with South Korean shipyards, particularly in naval shipbuilding, during a conversation with South Korean President Yoon Suk Yeol. South Korean companies like HD Hyundai Heavy Industries Co. and Hanwha Ocean Co. have already secured agreements with the U.S. Naval Supply Systems Command.



However, potential universal tariffs could pose challenges for Korean companies. Foreign media reports suggest Trump could announce numerous executive orders, including measures related to universal tariffs. Throughout his campaign, Trump pledged to impose tariffs on all imported goods and raise tariffs on Chinese imports. Such actions could significantly reshape global trade dynamics and add new challenges for South Korean exporters reliant on the U.S. market.



South Korean businesses are closely monitoring these developments, as they could introduce additional costs and disrupt supply chains, particularly for industries like automotive, electronics, and steel. With the international economic order undergoing rapid changes, there is a growing call to move away from the traditional export-driven economic model. Chey Tae-won, head of SK Group, suggested alternative strategies, including enhanced global economic cooperation and increased overseas investments, to adapt to the evolving global landscape.