U.S. President Donald Trump throws pens used to sign executive orders to the crowd during an indoor presidential inauguration parade event in Washington, Jan. 20. AP-Yonhap
Korea's exports are at risk of losing momentum, as major trade-reliant manufacturers face growing concerns over the potential impact of U.S. President Donald Trump's new tariffs on imported goods from Mexico, along with additional trade pressures, experts and industry officials said Sunday.
On Saturday (local time), Trump unveiled a new tariff plan, imposing a 25 percent tariff on goods from Mexico and Canada and 10 percent on those from China, citing concerns over illegal immigration and drug trafficking as the primary reasons for the move.
This move raises significant concerns for Korea at a critical time, as major Korean manufacturers in the chip, automotive and steel industries rely on their Mexican production lines for exports to the United States.
Companies like Samsung Electronics and LG Electronics operate multiple appliance manufacturing facilities in Mexico, while Kia and POSCO have established factories there to cut labor costs for U.S. exports.
With the tariffs set to take effect on Tuesday, these companies now face growing uncertainty regarding their U.S. earnings, as the tariffs will likely force them to allocate more in investments to align with Trump's protectionist policies.
Experts suggest that Korean companies may have no choice but to build more production lines in the U.S. to mitigate the impact of the tariffs.
"There are no clear breakthroughs other than establishing more factories there, as Trump continues to step up negative rhetoric against any countries generating huge trade surpluses with the U.S.," said Kim Dae-jong, a professor of business administration at Sejong University.
LG Electronics' manufacturing facility in the U.S. state of Tenessee / Courtesy of LG Electronics
According to data from the Ministry of Trade, Industry and Energy, Korea's trade surplus with the U.S. reached a record high of $55.69 billion (81.2 trillion won) in 2024.
Kim also advised the Korean government to consider increasing imports of U.S. petrochemical products as a gesture of trade cooperation, even if it leads to a decrease in the trade surplus.
"Trump is widely expected to continue increasing pressure on any countries reporting a high level of trade surplus with the U.S., so Korea needs to send repeated gestures to increase imports from the U.S.," the expert said.
Other data from the ministry also showed that Korea's exports are at risk of losing growth momentum. Exports here in January fell by 10.3 percent from a year earlier. This marks the first time since September 2023 that Korea's monthly exports declined.
Other experts also warned of more tariffs, particularly for export items generating huge revenues in the U.S.
"Automobiles account for more than half of Korea's trade surplus with the U.S., and chances are that Trump will impose countervailing duties of at least 10 percent to 20 percent against countries with strong trade surpluses with the U.S.," said Kim Pil-soo, an automotive technology professor at Daelim University College.
This would deal a severe blow to brands like Genesis — owned by Hyundai Motor Group — as most of the Genesis lineup is assembled in Korea for export to the U.S. The U.S. accounted for 32.7 percent of Genesis' total sales last year.
The automotive expert also urged the government and the National Assembly to work together in addressing the looming challenges posed by Trump.
"It is realistically tough for companies to diversify their export channels in a short period of time, so the Korean government and the Assembly should stop their unnecessary tit-for-tat (exchanges) and take action to respond to Trump's pressure despite the ongoing leadership vacuum caused by the impeachment of President Yoon Suk Yeol," he said.
Industry officials also expressed concerns about the escalating tariff pressure caused by Trump's policies.
"When companies are slapped with the increased tariffs, they will end up losing their price competitiveness and market share there," an official from a conglomerate said. "For now, companies have no choice but to join hands with the government to minimize the potential repercussions under the Trump administration."
In response, the government plans to closely monitor U.S. policy trends and collaborate with industry leaders to assess potential measures and mitigate the impact on domestic exporters.
Trade Minister Cheong In-kyo plans to hold a meeting, Monday, to discuss the impact of U.S. tariff measures on domestic companies and exports and to explore countermeasures.