Former U.S. President Donald Trump was elected as the 47th president on November 6 and is set to begin his second term next year. This development has major South Korean companies reevaluating their investment and production strategies due to potential shifts in U.S. policies. Trump’s agenda includes cutting subsidies, increasing tariffs, and promoting fossil fuel investments—significant departures from the current administration’s policies.
South Korean semiconductor and electric vehicle (EV) battery industries are particularly cautious. Companies like Samsung Electronics and SK Hynix have invested heavily in the U.S., spurred by subsidy programs. Samsung Electronics anticipates subsidies of $6.4 billion when its semiconductor plant in Taylor, Texas, becomes operational in 2026. Similarly, SK Hynix expects to receive $450 million in federal subsidies for its planned artificial intelligence (AI) semiconductor plant in Indiana.
“Since these subsidies fall under the CHIPS Act, initially spearheaded by the Republican Party, there’s hope that it will likely remain intact,” said an industry insider. “But nothing is set in stone anymore.”
The Korean EV battery sector, led by LG Energy Solutions, SK On, and Samsung SDI, benefited from over 2.65 trillion won in subsidies from the first quarter of last year to the third quarter of this year under the Inflation Reduction Act (IRA). The IRA, designed to promote EVs and renewable energy, now faces uncertainty under the new administration. Projected annual subsidies for Korean EV battery manufacturers, initially estimated between 5 trillion and 10 trillion won, are now in doubt. Potential subsidy reductions and a temporary slowdown in EV demand could significantly impact these companies.
Trump’s proposal of a 10% universal baseline tariff on all imports poses additional risks for Korean automobile exports. Increased tariffs could undermine auto exports to North America, one of the few growing markets amid a slowdown in global demand. Additionally, the new administration’s support for fossil fuels may adversely affect Korean renewable energy companies like Hanwha Qcells, which specializes in solar power.
On a positive note, experts suggest that increased U.S. oil and gas production could stabilize global energy prices, offering some relief. “The Korean shipbuilding industry could benefit from an increase in U.S. fossil fuel investments,” said Cho Sang-hyun, head of the Institute for International Trade at the Korea International Trade Association (KITA). “If the U.S. exerts more pressure on China, Korea’s semiconductor sector might find unexpected advantages.”
Source: The Chosun Daily