Samsung under pressure as US tariffs rattle South Korean economy

Samsung, the world's second-largest telephone maker, produces astir fractional of its handsets successful Vietnam. Photo: Nhac NGUYEN / AFP
Source: AFP

Sipping beverage connected her interruption extracurricular a Samsung Electronics mill successful bluish Vietnam, idiosyncratic Nguyen Thi Mai said she had heard astir US President Donald Trump's tariffs, but hoped it would not impact business.

Samsung, the world's second-largest telephone maker, produces astir fractional of its handsets successful Vietnam, and Trump's menace to enforce a 46-percent tariff menace connected the state sent shockwaves done the South Korean giant's proviso chains.

"We don't recognize overmuch astir macro issues," 27-year-old Mai told AFP, adding that regular beingness wrong the mill successful Bac Ninh state was unaffected, contempt planetary marketplace whiplash from on-again-off-again US levies.

"Our enactment goes connected normally," agreed Le Van Binh, 30, adding that helium hoped the Vietnamese authorities would beryllium capable to enactment retired a deal.

US tariff threats are shaking the logic that has underpinned decades of accelerated maturation and manufacturing concern successful processing Asian economies. Photo: Nhac NGUYEN / AFP
Source: AFP

"Our apical leaders are arranging to negociate with the United States. I anticipation they can beryllium palmy and things volition beryllium bully for each of us."

Samsung turned to Vietnam due to the fact that labour costs are "about one-tenth of those successful South Korea", Kim Dae-jong, a prof astatine Sejong University, told AFP.

But US tariff threats -- adjacent aft Trump abruptly paused them connected Wednesday -- are present shaking the logic that has underpinned decades of accelerated maturation and manufacturing concern successful processing Asian economies, helium said.

If Samsung "fully absorbs" the projected tariff outgo alternatively of shifting accumulation elsewhere "approximately 4 trillion won ($2.7 billion) -- oregon immoderate 33 percent of its smartphone operating nett -- would beryllium straight exposed", said Kim Dong-won, managing manager astatine KB Securities.

Samsung has built up inventory, and this week forecast grounds results for the archetypal 4th of 2025. And determination is scope for negotiations betwixt Hanoi and Washington, helium said -- but adjacent so, it is concerning.

'Reallocating production'

If Trump does travel through, Samsung and chap South Korean elephantine LG, which has besides invested heavy successful Vietnamese factories, whitethorn person nary prime but to displacement their investments to the United States, said Kang In-soo, an economics prof astatine Sookmyung Women's University.

"Despite the further costs involved, this appears to beryllium an inevitable determination to support oregon grow their beingness successful the strategically important US market," helium said.

For Samsung, high-end televisions are their cardinal operator of gross stateside, Yong Seok-woo, president and caput of the ocular show concern astatine Samsung Electronics told reporters.

"Most of the TVs sold successful North America are produced successful Mexico," said Yong, which dodged Trump's latest circular of tariff threats -- perchance leaving Samsung successful a amended presumption than galore rivals.

"We person 10 accumulation sites worldwide," Yong added.

"We program to flooded these challenges by reallocating accumulation based connected tariff conditions."

Domestic base?

The tariff threats look to beryllium aimed astatine securing further overseas investment, but with the United States lacking a beardown home basal to nutrient the high-end chips that are the lifeblood of the planetary economy, galore experts expect they volition not past successful the longer term.

Trump's determination to intermission the imposition of the levies sparked euphoria connected planetary markets connected Thursday -- but helium raised tariffs connected China to 125 percent due to the fact that of a "lack of respect".

Apple, Samsung's main rival, produces the bulk of its iPhones successful China.

Sky-high tariffs "could enforce important costs connected US-based semiconductor consumers", said Kang of Sookmyung Women's University, with the fearfulness of terms increases already sparking iPhone panic buying.

However, "it is expected that the tariffs volition beryllium adjusted downward erstwhile a capable level of concern is secured", Kang added.

Samsung's vulnerability underscores the broader vulnerability of export-driven Asian economies.

In 2024, nett exports accounted for much than 90 percent of South Korea's full economical growth.

The state has been peculiarly ill-prepared to look the economical headwinds, having been efficaciously leaderless since December, erstwhile impeached erstwhile president Yoon Suk Yeol declared martial law.

Officials are scrambling to incorporate the fallout: Acting person Han Duck-soo spoke to Trump this week, with the commercialized curate besides flying to Washington for exigency talks.

The authorities announced a artillery of enactment measures for South Korea's beleaguered car makers connected Wednesday -- deed by sector-specific 25 percent tariffs -- but they request to bash much to assistance the country's export-focused conglomerates, experts said.

Seoul indispensable "focus connected a proactive effect to US tariff measures and swiftly instrumentality a supplementary fund to stave disconnected a deeper economical downturn", Kang said.

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Source: AFP