South Korea’s AI Chip Watchdog: How New U.S. Tariffs Could Reshape the Semiconductor Battlefield

Seoul sharpens its focus as Washington's tariff hammer swings toward AI semiconductors—and the global supply chain braces for impact.

The Geopolitical Chessboard

This isn't just about customs duties. It's a strategic gambit in the high-stakes game for technological supremacy. New tariffs on AI chips don't just raise costs; they redraw alliance maps and force nations to recalculate their dependencies. South Korea's monitoring stance reveals a deeper truth: every trade barrier creates both a roadblock and a potential detour.

Supply Chains in the Crosshairs

Think of the global chip ecosystem as a meticulously balanced clock. A tariff is a wrench thrown into its gears. Production timelines stretch. Inventory strategies pivot overnight. For manufacturers caught between superpowers, agility becomes the only currency that matters—prompting some to explore 'friendshoring' options faster than you can say 'quarterly earnings miss.'

The Innovation Imperative

Barriers breed workarounds. History shows that protectionism often accelerates the very innovation it tries to contain. When one door slams shut, R&D labs kick others open. The focus shifts to next-gen architectures, alternative materials, and novel manufacturing techniques that might just bypass the new trade walls entirely.

Market Realities vs. Political Rhetoric

Here's the cynical finance jab: Wall Street's algorithms will price in the tariff risk long before the first container ship gets inspected. Stock tickers will twitch on headlines, while the real money moves in the shadows—hedging, arbitraging, and finding the loopholes that regulators haven't even imagined yet. The market, as always, remains one step ahead of the policy.

South Korea's watchful eye signals more than caution; it's a recognition that in the AI arms race, silicon is the new oil—and trade policy is the weapon of choice. The chips will keep flowing, but the currents are shifting beneath the surface.

South Korea responds to U.S. AI chip tariffs

The ministry stated companies, however, noted that a White House fact sheet suggested TRUMP may impose higher tariffs on imported semiconductors and related products to encourage domestic manufacturing. Such a move would create significant uncertainty for the semiconductor sector, the statement added.

Notably, U.S. President Donald Trump imposed a 25% tariff on specific AI chips, including the Nvidia H200 AI processor and AMD’s MI325X. The action was announced in a new national security order issued by the White House on Wednesday.

The WHITE House fact sheet stated that Trump understood the essential nature of both national security and the economy, recognizing the need to restore domestic semiconductor production capabilities, semiconductor manufacturing equipment, and products derived from them. 

The report revealed that the U.S. Secretary of Commerce’s Section 232 investigation under the Act was the basis for Trump imposing a 25% tariff on certain AI semiconductor chips. The investigation concluded that there is a threat to national security from the existing import volumes and conditions of semiconductors, related production equipment, and derivative items.

According to the administration, the Commerce Secretary suggested a tariff offset scheme that WOULD provide companies investing in U.S. semiconductor production and particular supply chains with priority treatment. The plan also included the possibility of imposing significantly higher tariffs on a broader range of semiconductor imports.

Commerce Secretary proposals follow a series of previous tariff threats and measures targeting imported semiconductors.

According to Cryptopolitan, the Trump administration threatened to apply tariffs of up to 100% on imported semiconductors last summer, except for businesses that construct semiconductor manufacturing facilities in the US. The report further noted that Trump had previously suggested tariffs be set at levels above 100%, possibly as high as 200% or 300%.

In April of last year, Trump imposed global reciprocal tariffs in response to the national emergency presented by the U.S.’s extensive and ongoing trade imbalances.

SK monitors won stability amid $350B investment pledge

Beyond tariffs, South Korea is closely monitoring the U.S. Treasury’s stance on currency stability, as Secretary Scott Bessent’s recent remarks have raised concerns about the potential devaluation of the won and its impact on bilateral commerce and investment.

SK Deputy Prime Minister and Minister of Economy and Finance Koo Yun Cheol said on Thursday that Scott Bessent’s remarks on the recent weakening of the Korean won demonstrate Washington’s understanding of the importance of stable foreign exchange rates to investment pledges.

According to a U.S. Department of the Treasury report, Bessent told a meeting in Washington with visiting Finance Minister Koo Yun-cheol that the recent weakness of the won was inconsistent with South Korea’s “strong” economic fundamentals. Additionally, he emphasized that “excess volatility” in the foreign currency market is not desired.

Senior Ministry of Economy and Finance official Choi Ji-young told reporters that the two finance ministers concurred that a stable won is crucial for bilateral trade and economic cooperation, and expressed concerns about the won’s recent sharp decline. 

The continued efforts to fulfill South Korea’s investment pledge align with the discussion about the stability of the won, a crucial component of the broader trade and economic agreement with the United States.

In October of last year, Soul and Washington finalized the details of South Korea’s US$350 billion investment commitment, made in exchange for a reduction in U.S. tariffs. Under the agreement, South Korea would make annual cash installments of $200 billion to the United States.

Sharpen your strategy with mentorship + daily ideas - 30 days free access to our trading program