Following President Trump's announcement of a 25% tariff on steel and aluminum products, the possibility of additional tariffs on automobiles, semiconductors, and pharmaceuticals has sent shockwaves through the Korean industry. Major Korean companies, which have seen significant sales growth in the North American market last year, are bracing for a potentially severe impact.

Surging North American Sales Heighten Dependence

President Trump's recent announcement of a 25% tariff on steel and aluminum imports, coupled with his statement that tariffs on automobiles, semiconductors, and pharmaceuticals are under consideration, has put the Korean industry on high alert.

Data reveals that major Korean companies exporting these products have experienced a remarkable 20% surge in sales in the North American market last year. This indicates a growing reliance on the North American market, making them even more vulnerable to the fallout from Trump's trade war. The semiconductor and automobile industries, which are Korea's top two export sectors, are expected to be particularly hard hit.

An analysis of 100 out of the top 500 Korean companies, which disclosed their North American sales (as of the third quarter of 2024), revealed a significant increase in sales. Their cumulative North American sales rose from 262.27 trillion KRW in the third quarter of 2023 to 313.52 trillion KRW in the same period of 2024, representing a 19.5% jump.

The share of North American sales in these companies' overall revenue also increased from 25.2% to 28.1% during the same period, underscoring their growing dependence on the North American market.

Semiconductor and Automobile Industries Face Greatest Risk

The IT and electronics sector witnessed the most substantial sales growth, with SK Hynix leading the charge. SK Hynix's US sales skyrocketed from 9.74 trillion KRW in the third quarter of 2023 to 27.31 trillion KRW in the same period of 2024, a nearly threefold increase. The share of North American sales in their total revenue also surged from 45.4% to 58.8%.

Samsung Electronics also saw a 24% increase in its Americas sales, reaching 84.68 trillion KRW in the third quarter of 2024. However, the share of North American sales in their total revenue increased only slightly, from 35.7% to 37.6%.

The automobile industry also experienced growth in North American sales. Hyundai Motors achieved 57.38 trillion KRW in sales in North America in the third quarter of 2024, a 17% increase from the same period last year. Kia Motors also saw a 12% increase in sales during the same period.

The growth of these major companies has also benefited their suppliers. Sungwoo Hi-Tech saw a 36.2% increase in North American sales, while Seoyon Ewha (33.7%) and Hyundai Mobis (8.1%) also experienced significant growth.

Korean Exports Under Threat

President Trump's rapid implementation of his promised tariffs, coupled with his statement that additional tariffs on automobiles, semiconductors, and pharmaceuticals are being considered, has raised concerns that these tariffs may soon become a reality.

According to the Korea International Trade Association, Korea's exports to the US reached a record high of 127.78 billion USD last year. The US is Korea's second-largest export market, accounting for 18.7% of its total exports.

Automobiles make up the largest share of these exports (34.74 billion USD), followed by semiconductors (10.68 billion USD). As these two sectors account for 30% of Korea's exports to the US, the imposition of tariffs on these products could have a significant negative impact on Korea's overall exports.

The Korean industry is bracing for the potential fallout from President Trump's trade policies, as the imposition of tariffs on these key export sectors could have far-reaching consequences for the Korean economy.