South Korean Firms Expected to Increase U.S. Investments Amid Customs Tariff Concerns

In light of potential policy changes under newly elected U.S. President Donald Trump, the South Korean trade minister indicated that investments from South Korea may increase in the U.S. Minister Cheong In-kyo expressed this view immediately following Trump's victory in the presidential race, stating that the U.S.'s implementation of higher tariffs could prompt South Korean companies to expand their direct investments and production on American soil.

Trade Minister Cheong stated, "If tariffs rise, the first alternative that firms might consider would be to increase direct investment and local production." These comments followed Trump's proposal to impose general tariffs ranging from 10% to 20% on all U.S. imports. Such a move could have significant impacts on trade-dependent economies like South Korea.

Cheong also noted that South Korean firms already have ongoing investments in the U.S. and that there is a possibility for these investments to accelerate. This will likely be accompanied by an increase in exports from South Korean small and medium-sized parts manufacturers to the U.S.

A state-funded think tank in South Korea estimated that the proposed tariffs could lead to an export loss of up to $44.8 billion for the country. This assessment underscores the potential effects of the trade policy changes contemplated by the Trump administration on South Korean businesses and the broader economic relations between the two countries.