Government Response to U.S. Tariffs
South Korea’s Industry Minister, Kim Jung-kwan, stated on January 15 that the government will continue to monitor the newly announced U.S. tariffs on advanced AI semiconductor chips to minimize their impact on domestic manufacturers.
According to a ministry statement, Kim Jung-kwan met with representatives of the South Korean semiconductor industry to discuss how to address the 25% duty imposed on semiconductors.
During the meeting, Kim Jung-kwan indicated that the tariffs would not significantly impact Korean businesses, as they do not apply to semiconductors used in U.S. data centers and startups.
Details of U.S. Tariffs and Potential Future Actions
The ministry noted that companies, however, pointed out that a White House fact sheet suggested Trump might 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.
U.S. President Donald Trump imposed a 25% tariff on specific AI chips, including the Nvidia H200 AI processor and AMD’s MI325X. This 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.
These Commerce Secretary proposals follow a series of previous tariff threats and measures targeting imported semiconductors.
According to Cryptopolitan, the Trump administration had previously 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.
Monitoring Currency Stability and Investment Pledges
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.
South Korea’s 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.
A 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, Seoul 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.