Korean companies consider options in response to Trump tariff threat on Mexico-made goods

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Korean companies consider options in response to Trump tariff threat on Mexico-made goods

Published: 27 Nov. 2024, 11:10 Updated: 27 Nov. 2024, 11:15

Samsung Electronics Co. workers at the company's production plant in Queretaro, Mexico. [SAMSUNG ELECTRONICS]

Korean companies with manufacturing bases in Mexico are scrambling to prepare for U.S. President-elect Donald Trump's plan to impose a 25 percent tariff on imports from Mexico at the start of his second presidential term.

The former U.S. president posted on social media Monday that he plans to use an executive order to levy tariffs on goods made in Mexico and Canada on his first day in office, part of his campaign pledge to entice firms to establish production bases in America.

Mexico has been regarded as an ideal export hub for targeting the North American market due to its low labor costs and the benefits of a U.S.-Mexico-Canada free trade agreement.

Samsung Electronics operates a home appliance factory in Queretaro and a TV factory in Tijuana. LG Electronics runs production facilities in Reynosa, Monterrey and Ramos Arizpe.

"Since we also operate production bases in various regions outside the U.S., we are preparing countermeasures while considering various possibilities, including changes in trade policies," an electronics industry source said.

LS Cable & System, which broke ground on a new factory in Mexico in August, is preparing response measures.

In the automotive industry, Kia operates a production plant in Mexico, producing 250,000 vehicles annually in Monterrey. Of these, approximately 150,000 units are exported to the U.S.

Auto parts makers Hyundai Mobis and Hyundai Transys also operate manufacturing facilities in Monterrey.

The Korean trade ministry is closely monitoring trade policy-related developments in the U.S. while assessing the potential fallout from the anticipated spike in tariffs.

"Since Trump is still the president-elect, no immediate actions are being taken as of now," a ministry official said. "Any policy implementation, such as imposing tariffs, will only occur after his inauguration in January."

Trade Minister Cheong In-kyo said in a recent meeting with companies operating in Mexico that the government will work to minimize business uncertainties by operating cooperation channels with Mexico's central government and local governments where many South Korean companies are based.

The ministry is closely watching the possibility of Vietnam also becoming a target of U.S. tariffs, as the Southeast Asian nation posted the third-largest trade surplus among the U.S.' trade partners in 2023.

Vietnam serves as a major production base for many Korean companies. Korea accounts for 17.9 percent of total investment and 24.3 percent of projects among Vietnam's 148 foreign investor countries.

Yonhap