LG, Samsung Worried About "Trump Tariffs"

Advertisement
Advertisement

It's been almost a week since the US presidential elections took place, but the GOP candidate and President-elect Donald John Trump is still the talk of the town and likely will be for quite some time. The upcoming administration will certainly change a lot of industries with new sets of rules and regulations as Trump's political platform was heavily based on the idea of promoting production in the United States and limiting the influx of foreign-made goods into the country.

Apart from requesting American companies to keep their manufacturing operations within the US and stop outsourcing production, President-elect Trump has also pledged to raise tariff barriers in order to make domestically produced goods more competitive on the market. While that is a less-than-ideal situation for US-based tech giants like Apple, the foreign IT companies are even more worried about Trump's plans. As Business Korea reports, South Korean tech companies such as LG  and Samsung have recently been moving a lot of their production facilities to China and Vietnam to reduce labor costs and obviously aren't too thrilled about the likely possibility of paying increased tolls on the products they import to the United States.

As the North American sales amount to almost one-third of total sales of both LG and Samsung, high tariffs would almost certainly significantly lower their revenue and profits. Given how most of the final assembly sites of the South Korean tech giants are located in China, Trump's promise of 45% tariffs on Chinese goods certainly isn't good news for these companies. In addition to that, the new administration will likely scrap the Trans-Pacific Partnership (TPP), a major trade deal negotiated by the US under President Obama and 11 other Pacific countries. The ultimate goal of the TPP was to slash tariffs and foster trans-Pacific trade to create a unified market similar to that of the European Union. While the Korean tech giants would obviously profit from such a partnership, the fact that it's yet to be ratified means that Trump's administration can and likely will scrap it in a relatively simple manner.

Advertisement

On the other hand, the South Korean IT industry could also see some benefit from Trump's economic policy which also wants to prevent Chinese companies from taking over US firms. This is significant because acquiring American chip makers has so far been China's primary method of competing with Korean semiconductor manufacturers.