Key Takeaways
- Trump hinted at potentially higher tariffs on semiconductors and pharmaceuticals.
- The U.S. is expanding tariffs on steel and aluminum, as well as automotive parts.
- Korean industries are closely monitoring developments due to potential impacts from U.S. tariff policies.
Tariff Discussions and Potential Impacts
During a recent flight to the UK, U.S. President Donald Trump indicated that his administration might impose higher tariffs on semiconductors and pharmaceuticals than the existing 25% on auto imports, citing the higher profit margins in these sectors. This statement was made as Trump responded to concerns about reducing tariffs on foreign cars from 25% to 15%, a move that has caused discontent among U.S. automakers.
Trump previously suggested that tariffs could reach up to 100% for semiconductors and between 150% and 250% for pharmaceuticals. This raised alarms among Korean companies in these sectors, who are now closely monitoring the situation due to the potential ramifications.
An official in the semiconductor industry noted that high tariffs on chips could inadvertently harm U.S. companies like Nvidia, which rely on integrated global supply chains. They emphasized that the protective nature of tariffs seen in the automotive sector may not apply similarly to the semiconductor industry.
Meanwhile, U.S. authorities have initiated measures to expand current tariffs on steel and aluminum products. A recent notice in the Federal Register outlined a process to consider additional items for inclusion in existing tariffs. The submission period for input on these potential additions is open until September 29. Currently, a 50% tariff applies to steel derivatives, justified under national security clauses from the Trade Expansion Act of 1962.
In addition, the U.S. Commerce Department has opened a window for domestic automakers and related associations to request the inclusion of more auto parts in the tariff scope. Since May 3, auto parts have been subject to a 25% tariff, and this new process aims to determine if further protection is necessary. Submission opportunities are expected to recur regularly.
Given these developments, Korean industries may face significant challenges due to expanded tariffs on steel, aluminum, and automotive components. The unfolding situation highlights the complex nature of international trade and the delicate balance of protecting domestic industries while engaging in global markets.
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