US Chip Tariffs Threaten South Korea’s Export Boom—Here’s Why It Matters

Seoul sounds the alarm as Washington's semiconductor squeeze could derail a key economic engine.

The Silicon Standoff

South Korea's tech-driven export machine faces a gut punch from proposed US tariffs—just as global chip demand hits record highs. Industry insiders whisper about contingency plans, but reshoring supply chains isn't like flipping a switch.

Numbers Don't Lie

With semiconductors accounting for nearly 20% of total exports, even a 5% tariff could wipe out $3.4 billion in annual trade. Funny how 'free market' rhetoric vanishes when election season starts.

The Ripple Effect

Memory chip prices already spiking? Thank geopolitical chess moves disguised as trade policy. Next stop: another excuse for tech giants to pad profit margins while blaming 'macro conditions.'

South Korea’s Yeo suggested an extension to the tariff freeze past the August deadline

If the US proceeds with semiconductor levies, it could deeply hurt exports of major chip manufacturers like Samsung Electronics Co. and SK Hynix Inc., potentially destabilizing the global supply network.

South Korea has been negotiating for cuts in sectoral tariffs on automobiles and steel for weeks, hoping to secure a deal ahead of the scheduled reciprocal tariff hikes on August 1. On Thursday, Yeo even met with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick to discuss tariff reductions and a possible hold on the 25% blanket tariffs beyond the current deadline.

After the meeting, the trade minister told reporters that he hoped they could quickly arrive at a landing zone on their discussions with Washington.

Yeo also stressed their interest in a “manufacturing renaissance partnership” with Washington, adding that the US is also pursuing collaborations with Korean manufacturing companies. He added that they are looking into how Japan handles its tariff situation to streamline their negotiation strategy. 

Currently, exports make up over 40% of South Korea’s GDP; hence, all the more need for the Asian nation to arrive at an agreement with the US.

Washington is pushing Seoul to increase its payments for hosting the US military and add agricultural imports

The impeachment of President Yoon Suk Yeol derailed much of the nation’s negotiations with the US. However, following his ouster, newly elected President Lee Jae Myung and his administration have moved quickly to restart and accelerate the stalled discussions. 

Some officials, however, believe they are rushing into making a deal. A senior Lee administration official commented, “Protecting national interests is more important than having swift consultations.” 

That said, Yeo came to the administration’s defense, saying that his team still WOULD not “sacrifice substance for speed” just because they’re on a tight timeline.

But at this late stage, he argued they must be ready to engage in a game of give and take with Washington and maximise national interests pragmatically.

Meanwhile, in their recent talks, Washington has been pushing for Seoul to raise its contribution for hosting US troops, adding another LAYER of difficulty to the ongoing negotiations. US Secretary of State Marco Rubio, speaking with South Korea’s National Security Adviser Wi Sung-lac on Monday, even stressed the need for sustained communication before the August deadline.

Nevertheless, Yeo maintains that South Korea wants a comprehensive trade agreement to promote steady relations, emphasizing that the threat of erratic US tariffs extends well beyond Korea.

The Asian nation is also under massive pressure to open its agricultural market further to foreign imports. On that, Yeo stated that there’s no such thing as a “painless agricultural negotiation”, adding that they’ll have to make strategic choices.

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