By Chang Dong-woo
SEOUL, Jan. 21 (Yonhap) — 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.
While concerns abound over possible rollbacks of key U.S. legislation, such as the CHIPS and Science Act and the Inflation Reduction Act (IRA), some sectors anticipate opportunities 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 firms have announced major U.S. investments — Samsung with a US$17 billion semiconductor plant in Texas and SK hynix with a $3.87 billion advanced packaging plant for artificial intelligence (AI) memory chips in Indiana.
Samsung and SK hynix have secured pledges of $6.4 billion and $450 million, respectively, in grants from the U.S. for their investments in the country.
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.
U.S. President-elect Donald Trump speaks during a news conference at Mar-a-Lago in Palm Beach, Florida, on Jan. 7, 2025, in this file photo released by the Associated Press. (Yonhap)
Battery manufacturers face similar concerns under the IRA.
Companies such as LG Energy Solution Ltd. and SK On Co., which heavily rely on IRA tax credits to sustain profitability, could see their margins squeezed if the legislation is scaled back.
In the third quarter alone, LG Energy Solution received 466 billion won (US$321.2 million) and SK On 60.8 billion won in IRA-related tax benefits. Without such 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 say the eligibility requirements for subsidies received by battery companies could face significant changes.
Koo Ja-min, an attorney at Covington & Burling LLP and a member of the IRA advisory team of the Korea Battery Industry Association, said in a recent seminar in Seoul, “It would be difficult to pass a bill repealing the IRA.”
He highlighted that the IRA has driven over $100 billion in clean energy investments and created more than 100,000 jobs in districts largely represented by Republicans. “Of the top 10 districts receiving the most IRA-related investments, eight are Republican-led,” he explained.
The headquarters of Samsung Electronics Co. in Seoul (Yonhap)
The automotive sector is bracing for potential headwinds as well.
Trump’s campaign hinted at rolling back federal mandates for electric vehicles (EVs), a move that could slow South Korean automakers’ EV exports.
Hyundai Motor Group, which holds the second-largest market share for EVs in the U.S. after Tesla, could face significant challenges in expanding its foothold.
Following Trump’s reelection in November, Hyundai Motor Co. promoted Jose Munoz, the company’s global chief operating officer, as its new CEO, appointing a foreign national to the top post for the first time since its foundation more than five decades ago.
The surprise appointment of Munoz has been seen as demonstrating the South Korean automotive giant’s resolve to thoroughly prepare for increasingly uncertain market conditions under a second Trump administration.
“Munoz’s appointment as CEO is seen as reflecting Hyundai’s determination to better deal with the potential fallout in the U.S. market after Trump begins his second term,” an automotive industry watcher said, asking for anonymity.
Hyundai Motor Co. CEO Jose Munoz (R) speaks next to Hyundai Motor Group Executive Chair Euisun Chung during a company meeting in Goyang, north of Seoul, in this Jan. 6, 2025, file photo. (Yonhap)
Regarding U.S. EV policy under Trump, Munoz said earlier this month he doesn’t want to speculate whether benefits will stay or go, saying, “That’s something I can’t control,” but stressed that he was confident the group can “find a way as always.”
Hyundai Motor’s U.S. unit recently donated $1 million to the inauguration fund for Trump, the first for a South Korean business, raising speculation of a potential future meeting between Trump and Euisun Chung, executive chair of Hyundai Motor Group.
South Korea’s shipbuilding industry, meanwhile, sees Trump’s return to power as an opportunity.
During a phone conversation with South Korean President Yoon Suk Yeol following his election in November, Trump expressed interest in collaborating with South Korean shipyards, particularly in naval shipbuilding, repairs and maintenance.
While South Korea had long held the top spot in shipbuilding orders, China overtook it in recent years, claiming 60 percent of the global market share in 2023.
“Trump’s administration appears to be keen on addressing the U.S. Navy’s declining capacity by leveraging South Korean expertise,” a shipbuilding industry observer said.
Major South Korean players like HD Hyundai Heavy Industries Co. and Hanwha Ocean Co. have already laid the groundwork for cooperation, securing master ship repair agreements with the U.S. Naval Supply Systems Command.
This file photo, provided by Daewoo Shipbuilding & Marine Engineering, shows Donald Trump (2nd from R) and his eldest son, Donald Trump Jr. (L, rear), visiting the South Korean shipbuilder’s Okpo Shipyard on Geoje Island, about 330 kilometers southeast of Seoul, on June 5, 1998. (PHOTO NOT FOR SALE) (Yonhap)
Possible universal tariffs could also pose challenges for Korean companies.
According to foreign media reports, Trump could announce as many as 100 executive orders and related measures on his first day in office. Among these, industry experts believe there is a strong likelihood of measures related to universal tariffs being included.
Throughout his campaign, Trump has repeatedly pledged to impose a minimum 10 percent, and up to 20 percent, tariff on all imported goods, and raise tariffs on imports from China to as high as 60 percent.
Such sweeping tariff actions, if implemented, could significantly reshape global trade dynamics and add new challenges for South Korean exporters reliant on the U.S. market.
This photo provided by the Korea Chamber of Commerce and Industry shows Chairman Chey Tae-won speaking during an interview with KBS on Jan. 19, 2025. (PHOTO NOT FOR SALE) (Yonhap)
“South Korean businesses are closely monitoring these developments, as they could introduce additional costs and disrupt supply chains, particularly for key industries like automotive, electronics and steel,” an official at the Korea International Trade Association said.
With the international economic order undergoing rapid changes, there is also a growing call to move away from the traditional export-driven economic model.
Chey Tae-won, head of SK Group and chairman of the Korea Chamber of Commerce and Industry, remarked in an interview with KBS on Sunday, “”The export-driven economic model that has been utilized for decades no longer functions as effectively under the current trade order.”
He suggested alternative strategies, including those involving enhanced global economic cooperation, increased overseas investments and attracting foreign citizens as ways to adapt to the evolving global landscape.
odissy@yna.co.kr
(END)
