Samsung Under Pressure as US Tariffs Rattle South Korean Economy
AFP/APP
Vietnam: Sipping tea during her break outside a Samsung Electronics factory in northern Vietnam, worker Nguyen Thi Mai said she had heard about US President Donald Trump’s tariffs, but hoped they would not affect business.
Samsung, the world’s second-largest phone maker, produces around half of its handsets in Vietnam. Trump’s threat to impose a 46-percent tariff on the country has sent shockwaves through the South Korean giant’s supply chains.
“We don’t understand much about macro issues,” said 27-year-old Mai, adding that daily life inside the Bac Ninh province factory remained unaffected despite global market turmoil from Trump’s on-again-off-again tariff policies.
“Our work goes on normally,” agreed 30-year-old Le Van Binh. “I hope the Vietnamese government will be able to work out a deal with the US. Our top leaders are arranging to negotiate with the United States. I hope they can be successful and things will be good for all of us.”
Samsung turned to Vietnam due to significantly lower labor costs—“about one-tenth of those in South Korea,” explained Kim Dae-jong, a professor at Sejong University. However, the US tariff threats—though temporarily paused by Trump—are shaking the foundational logic that has driven decades of manufacturing investment in developing Asian economies.
If Samsung absorbs the full cost of the proposed tariffs without shifting production, it could expose approximately four trillion won ($2.7 billion)—about 33 percent of its smartphone operating profit, warned Kim Dong-won, managing director at KB Securities.
Although Samsung has built up inventory and forecast record results for Q1 2025, the uncertainty is still troubling. There remains hope for negotiations between Hanoi and Washington, but risks persist.
If Trump follows through on the tariffs, Samsung and fellow South Korean giant LG—both of which have made major investments in Vietnamese factories—may be forced to shift operations to the US.
“Despite the additional costs involved, this appears to be an inevitable decision to maintain or expand their presence in the strategically important US market,” said Kang In-soo, an economics professor at Sookmyung Women’s University.
For Samsung, high-end televisions are a key revenue driver in the US market.
“Most of the TVs sold in North America are produced in Mexico,” said Yong Seok-woo, president and head of the visual display business at Samsung Electronics.
“We have 10 production sites worldwide. We plan to overcome these challenges by reallocating production based on tariff conditions.”
Analysts believe the tariff threats are aimed at securing more foreign investment in the US. However, given America’s limited domestic capacity for producing the advanced chips that drive the global tech industry, many experts expect the tariffs may not last long-term.
Trump’s decision to pause the Vietnam levies sparked optimism on global markets on Thursday. However, he simultaneously raised tariffs on China to a staggering 125 percent, citing a “lack of respect.”
Apple, Samsung’s chief rival, manufactures most of its iPhones in China. The sky-high tariffs could lead to significant costs for US-based semiconductor consumers and have already triggered iPhone panic-buying.
“It is expected that the tariffs will be adjusted downward once a sufficient level of investment is secured,” said Kang.
Samsung’s exposure highlights the broader vulnerability of export-driven Asian economies. In 2024, net exports accounted for over 90 percent of South Korea’s total economic growth. The country has been particularly unprepared for these economic headwinds, having effectively lacked leadership since December when impeached former president Yoon Suk Yeol declared martial law.
In response, officials are scrambling to contain the fallout. Acting leader Han Duck-soo spoke to Trump this week, and the trade minister has flown to Washington for emergency talks. On Wednesday, the government announced support measures for South Korea’s car makers—hit by 25 percent sector-specific tariffs—but experts warn more must be done.
“Seoul must focus on a proactive response to US tariff measures and swiftly implement a supplementary budget to stave off a deeper economic downturn,” Kang concluded.
