From home appliances to K-beauty, Korean exports brace for U.S. tariff expansion

Home > Business > Industry

From home appliances to K-beauty, Korean exports brace for U.S. tariff expansion

Published: 18 Aug. 2025, 19:34 Updated: 18 Aug. 2025, 19:38

SARAH CHEA
[email protected]

Audio report: written by reporters, read by AI

Steel products are piled up for export at a port in Pyeongtaek, Gyeonggi. [YONHAP]

[NEWS ANALYSIS]

The Donald Trump administration’s expansion of steel and aluminum products subject to 50 percent tariffs, from refrigerators to cosmetics packaging, has once again tightened the squeeze on Korean enterprises, impacting a broad spectrum of strategic industries and even everyday consumer goods like kitchen knives and forks.

While small and microsized businesses are expected to bear the brunt of the impact, the tariffs are unlikely to spare bigger conglomerates like home appliance makers Samsung Electronics and LG Electronics, auto parts makers Hyundai Mobis and power equipment companies such as HD Hyundai Electric. Refrigerators, auto parts and transformers are within Korea’s top 10 export items to the United States.

Starting Monday, the U.S. Commerce Department added 407 Harmonized Tariff Schedule of the United States codes to the list of steel and aluminum derivative products now subject to 50 percent tariffs. These products will face additional duties calculated based on their steel and aluminum content, on top of the existing 15 percent reciprocal tariffs already imposed on Korean goods.

Despite objections filed by the Korean government, more than 1,000 products will now be subject to steep tariffs on top of the 615 items already covered, including key export items such as refrigerators, auto parts, transformers, turbines and engines.

The Korea International Trade Association (KITA) estimates that U.S. imports from Korea of the newly targeted items amount to approximately $11.89 billion, accounting for around 5.8 percent of the United States’ total imports.

The hardest-hit category is expected to be refrigerators and freezers, with U.S. imports from Korea totaling roughly $1.6 billion last year — products primarily manufactured by Samsung Electronics and LG Electronics. Cosmetics ranked second at around $1.3 billion, followed by auto parts in third place with imports valued at roughly $670 million.

Used aluminum is piled up at a port in Pyeongtaek, Gyeonggi. [NEWS1]

While Samsung, LG and Hyundai all operate manufacturing facilities in the United States, they may opt to shift to local sourcing to avoid the 50 percent duties — a move that could result in job losses among Korean auto parts and component suppliers. Korea is home to roughly 20,000 auto parts manufacturers with more than 210,000 employees.

“This tariff announcement will impact not only large corporations but also small- and medium-sized enterprises across the board; one could argue that the U.S. government granted virtually all requests made by its domestic companies when compiling the list,” said researcher Han Ah-reum at KITA.

“Transformers, which have been strong export performers, are likely to face significant blows.”

High-voltage transformers are among Korea’s key export products to the United States, driven by the boom in AI and data centers. HD Hyundai Electric, Korea’s largest player in the sector, supplies about 60 percent of U.S. demand directly from its plant in Ulsan. Over 53 percent of Hyosung Heavy Industries’ new high voltage orders from 2024 came from the U.S. market.

In monetary terms, steel accounts for roughly 15 percent of the value of a high-voltage transformer. Given that each unit is priced around 5 billion won ($3.6 million), a company that would have previously paid 750 million won in tariffs per transformer would have to face a total of 1 billion won in duties due to the additional steel-content-based levy.

LG Chairman Koo Kwang-mo, center with the grey shirt, inspects LG Electronics' home appliance plant in Tennessee in June 2024. [YONHAP]

Industry experts have also pointed out that the broadened tariff measures are likely to impose a substantial administrative burden on affected businesses.

"Companies are now required to determine and report the exact percentage of steel and aluminum content in each product, as well as the origin of those materials — a level of scrutiny that had not been necessary under the FTA,” said Chang Sang-sik, head of trade trend analysis at KITA. “Many industry players are calling the requirement unworkable and raising serious concerns."

Meanwhile, Hyundai Motor, Kia and Hana Bank have jointly contributed 40 billion won to establish a financial support program for auto parts suppliers, with the Korea Trade Insurance leveraging the fund to provide a total of 630 billion won in preferential financing. Under the program, smaller suppliers can borrow funds from Hana Bank at interest rates up to 2 percentage points lower than usual. Korea Trade Insurance will also offer extended guarantees, with guarantee periods extended from one year to three, and guarantee fees reduced from 1 percent to 0.65 percent.

The U.S. government plans to hold another round of comprehensive reviews in September and accept requests from domestic firms to expand the tariff list against foreign companies.

BY SARAH CHEA [[email protected]]