South Korea firms brace themselves as U.S. tariff threats linger

South Korean firms with businesses in Canada and Mexico revealed that they are bracing for U.S. President Donald Trump’s tariff threats. The President plans to impose tariffs on goods from the two neighboring countries starting this week.

Trump announced on Monday that his administration will start imposing 25% tariffs on Canadian and Mexican goods on March 4. The President also pointed out that the two countries could not delay the planned duties.

South Korean companies brace for Trump’s tariff threats

"Korean businesses on alert over likely fallout from imminent US tariffs on Canada, Mexico"

Worth noting that KIA, Samsung, Posco, LG, etc all have manufacturing lines in both of these countrieshttps://t.co/gvsP1sNS6J

— Kimchi Premium (@kimchipump) March 4, 2025

South Korean groups, along with businesses in Canada and Mexico, are readying for Trump’s plan to impose tariffs on goods from the two countries starting today. Seoul’s foreign ministry tallied South Korea’s bilateral trade with Canada and Mexico in 2023 at $14.62 billion and $19.8 billion, respectively.

The country’s CXO Institute also revealed local corporate data that showed 25 Korean conglomerates had operated a combined 201 subsidiaries in the two states as of the end of 2024. 110 subsidiaries of the total entities are located in Canada and 91 in Mexico. Samsung Group leads with 50 entities in Canada and 18 in Mexico. Hyundai Motor Group follows with 16 and 12 subsidiaries in Mexico and Canada, respectively.

The analytic firm also noted that Mexico has served as an ideal export hub for targeting the North American market due to its low labor costs. The country benefits from the U.S.-Mexico-Canada Free trade agreement (USMCA), which is also threatened by the looming tariff threats. South Korea also ranked 11th in foreign direct investments made in Mexico in 2023.

The local corporate report also noted that Samsung Electronics Co. operates a home appliance factory in Queretaro and a TV factory in Tijuana. LG Electronics also runs production facilities in Monterrey, Reynosa, and Ramosa Arizpe.

Automotive manufacturer Kia Corp. also operates a production plant in Mexico that produces 250,000 vehicles annually in Monterey. The analytic farm revealed that nearly 150,000 of produced units get exported to the U.S.

“It will not be easy for the companies to move their plants to the U.S. in a short period of time to avoid higher tariffs. They need to increase production in their U.S. plants or diversify markets.”

~ Korea CXO Institute official

The local corporate data firm added that the situation worsened with Trump’s intention to impose separate sectoral tariffs on automobiles and semiconductors starting in April. The firm believes the sectoral tariffs will further burden Samsung Electronics and Hyundai Motor Group with duties in their U.S. businesses.

Jose Munoz, Hyundai Motor’s former U.S. chief said in a letter to shareholders earlier last month that they were having dialogue with the new U.S. administration “to reinforce our significant investments, job creation and economic impact.”

The country’s exports depreciated growth momentum in February as demand for semiconductors weakened and officials scrambled to engage the U.S. in hopes of averting a hit from Donald Trump’s tariff campaign. 

An official at Kia’s Mexican unit revealed to Yonhap News Agency that the firm “plans to respond by aligning with the policies of both the U.S. and Mexican governments to minimize risks.”

South Korea’s acting president calls for unity to respond to U.S. trade war

Seoul’s Industry Minister Ahn Duk-geun asked the U.S. during his recent visit to Washington to exclude South Korea from its new tariff plans. He made the suggestion while discussing expanding bilateral cooperation in various fields. Duk-guen also met with U.S. Secretary Howard Lutnick, U.S. Trade Representative Jamieson Greer, U.S. Secretary of Interior and National Energy Dominance Council Chairman Doug Burgum and other officials in Washington last week.

Seoul cemented its position to the U.S. that it aims to secure tariff exemptions first and foremost. The country hopes to at least ensure that Korea is not put at a disadvantage compared with other countries if it is unable to secure tariff exemptions.

Choi Sang-mok, South Korea’s acting President, announced on Tuesday that the government, parliament and the private sector should be united to respond to the U.S. “trade war.”

South Korea’s President and the United States had agreed during a cabinet meeting to form a consultative group to discuss tariff measures and cooperation on shipbuilding.

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