Samsung faces Galaxy price conundrum as Vietnam hit with 46% tariff by U.S.

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Samsung faces Galaxy price conundrum as Vietnam hit with 46% tariff by U.S.

Published: 03 Apr. 2025, 17:48

JIN EUN-SOO
[email protected]

Audio report: written by reporters, read by AI

Samsung Electronics' Vietnam facilities [SAMSUNG ELECTRONICS]

The imposition of a 46 percent tariff on Vietnamese imports by U.S. President Donald Trump on Wednesday is set to deal a significant blow to Samsung Electronics and LG Electronics, which produce major electronic products in the Southeast Asian country including Galaxy smartphones.

The Trump administration announced a list of levies imposed on select trading partners, with Vietnam, a major manufacturing hub for Korean companies, slapped with a whopping 46 percent rate.

The Southeast Asian country is home to core production facilities for Samsung Electronics' Galaxy smartphone series, known to be responsible for more than 50 percent of annual production.

Leveraging the country's cheap labor costs and advanced technical capabilities, Samsung has built two smartphone factories in the northern regions of Bac Ninh and Thai Nguyen.

Galaxy smartphones produced there get exported to 128 countries, including the United States, although the specific breakdown hasn't been provided.

"Samsung will either have to give up some margin or sell less in the U.S. market," said Noh Geun-chang, head of Hyundai Motor Securities' research center.

"Relocating facilities from Vietnam is an unlikely scenario. There is an advantage to manufacturing smartphones in Vietnam, unlike products like semiconductors. Samsung could choose to reduce sales in the U.S. market and offset the gap in other regions, or it could maintain pricing despite the tariffs while absorbing that much of a corresponding hit to its profitability."

Samsung Electronics, by shipment, comes in second spot in the U.S. smartphone market, but with a wide gap with the top player. It grabbed 18 percent in the fourth quarter of last year, while Apple accounted for 65 percent, according to data from market analyst Counterpoint Research.

"Although Apple's products will get levied with tariffs, it is in a better position because its margin per unit sold is way higher than that of Samsung's Galaxy line," Noh said.

Apple assembles a majority of its products, including iPhones and iPads, in China, which was hit with a cumulative tariff rate of 54 percent as the White House imposed additional reciprocal tariffs of 34 percent on the country on Wednesday.

Vietnam is also home to an array of home appliance manufacturing facilities.

Samsung Electronics produces refrigerators and washing machines at its Ho Chi Minh City facilities. LG Electronics, meanwhile, manufactures washing machines, vacuums and air conditioners at its Hai Phong facilities in Vietnam along with other affiliates such as LG Display, LG Innotek and LG Chem.

LG Electronics said Thursday it will utilize its "manufacturing swing system" to flexibly operate its production facilities. Samsung Electronics did not have a comment.

Vietnam has been the albatross around Trump's neck since his first administration, as indicated by a 2019 comment referring to the Southeast Asian country as "the single worst abuser of everybody."

With the trade war between the United States and China intensifying at the time, many companies re-routed their manufacturing to Vietnam to evade a tax, which the Trump administration saw as a "loophole" in its tariff policies.

On Wednesday, Korea was levied with reciprocal tariffs of 26 percent, higher than what the industry had anticipated.

Meanwhile, Samsung Electronics Executive Chairman Lee Jae-yong flew over to Japan on Wednesday to meet with business partners in chips and auto components, according to local reports.

He went on a business trip to China last week to meet Chinese President Xi Jinping and chief executives of Xiaomi and BYD.

BY JIN EUN-SOO [[email protected]]