South Korea's Industry Minister, Kim Jung-kwan, stated on January 15 that the government will continue to monitor the impact of newly announced U.S. tariffs on advanced AI semiconductor chips to minimize disruptions for domestic manufacturers. The announcement follows a meeting between the minister and representatives of the South Korean semiconductor industry to discuss the 25% duty imposed on specific chips.
The tariffs, enacted by U.S. President Donald Trump via a new national security order, target specific AI processors like the Nvidia H200 and AMD's MI325X. Minister Kim suggested the immediate impact on Korean businesses may be limited, as the tariffs reportedly do not apply to semiconductors destined for U.S. data centers and startups. However, industry representatives expressed concern over a White House fact sheet hinting at potential future tariff increases on a broader range of imported semiconductors to encourage domestic U.S. manufacturing, which could create significant sector uncertainty.
The U.S. action is based on a Section 232 investigation by the Commerce Secretary, which concluded that current import volumes of semiconductors and related equipment pose a threat to national security. The Commerce Secretary proposed a tariff offset scheme offering priority treatment to companies investing in U.S. semiconductor production and supply chains, alongside the possibility of imposing "significantly higher tariffs" on a wider array of imports. This follows previous threats from the Trump administration to apply tariffs as high as 100%, or even 200-300%, on imported semiconductors last year.
Parallel to the tariff discussions, South Korea is closely watching U.S. Treasury statements on currency stability. During a meeting in Washington, U.S. Treasury Secretary Scott Bessent told visiting South Korean Finance Minister Koo Yun Cheol that the recent weakness of the Korean won was inconsistent with the country's strong economic fundamentals. Both sides agreed that a stable won is crucial for bilateral trade and economic cooperation, expressing concern over the currency's sharp decline and undesired "excess volatility."
This focus on currency stability is directly tied to a major bilateral economic agreement. In October of last year, Seoul and Washington finalized details of a deal where South Korea pledged a $350 billion investment commitment in exchange for a reduction in U.S. tariffs. Under this agreement, South Korea is to make annual cash installments of $200 billion to the United States.
