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As tariffs slam the world, one Korean industry slides under the radar

Published: 04 Apr. 2025, 17:44 Updated: 09 Apr. 2025, 22:01

U.S. President Donald Trump holds a signed executive order on tariffs in the White House Rose Garden in Washington on April 2. [REUTERS/YONHAP]

Korean biopharmaceutical firms have found temporary relief after being spared from the “reciprocal” tariffs U.S. President Donald Trump announced Wednesday.

The Trump administration vowed to lower medical expenses, signaling to companies that tariffs would be levied at a later time and lower rate than the sweeping 25 percent on Korean imports.

The same couldn’t be said for all Korean food and beverage (F&B) and cosmetics firms. Some were unaffected due to their manufacturing facilities in the United States while others face a likely drop in sales or rise in costs.

Pharma and bio hang on hope

U.S. President Trump exempted pharmaceutical products from the baseline 10 percent on most U.S. imports to prevent negative consequences for public healthcare in his address at the Rose Garden on Wednesday. Korean pharmaceutical exports are currently exempt from tariffs under the nation's FTA with the United States. Pharmaceutical and bio insiders say levying tariffs on medication could raise medical costs and disrupt supply chains in the United States, making it difficult for the U.S. government to immediately impose the same tax rates on the products.

The Pharmaceutical Research and Manufacturers of America, the biggest spender among the nation's lobbyists, has repeatedly asked the Trump administration to increase tariffs on pharmaceutical products incrementally over multiple years to reduce the ripple effects of taxes and to buy time to relocate plants to the United States. The U.S. government agrees that there is no need to speed up pharmaceutical tariffs, according to Reuters. This is why major Korean biotech and pharmaceutical contract development and manufacturing organizations like Samsung Biologics aren’t sprinting to construct plants in the United States.

Pfizer's antiviral medication is produced at the company's plant. [PFIZER KOREA]

Of benefit to Korea is the Trump administration's push for the domestic production of essential medicine — such as fever reducers and painkillers — which doesn’t overlap with Korean firms’ major exports. The U.S. government has been laying down plans to promote generic drugs as a means to curb medical costs, which analysts say would make overseas manufacturing unavoidable in order to keep prices down.

Shares of major Korean biopharmaceutical firms closed higher on Thursday, defying the broader market drop, with Samsung Biologics rising 6.3 percent, SK Biopharmaceuticals up 4.71 percent and Celltrion up 1.18 percent.

“It seems unlikely that across-the-board tariffs will be implemented immediately, given the potential disruption to drug supply,” DS Investment & Securities analyst Kim Min-jeong said.

Gainers and losers among F&B and beauty

Korean F&B and beauty firms, responsible for some of the nation's major exports, are facing diverging futures depending on whether they have production facilities in the United States or not.

Many small- and medium-sized enterprises in the Korean beauty space rely on the production capacity of original design manufacturers, including Kolmar Korea, Cosmax and Cosmecca Korea, which operate plants in the United States that could potentially allow them to sidestep tariffs.

A person shops at an Asian grocery store in Rowland Heights, California on April 3. [AP/YONHAP]

Food companies that entered overseas markets early have also begun to produce domestically. CJ CheilJedang, which currently operates 20 factories in the United States, is building a new plant in Sioux Falls, South Dakota, set to finish in 2027. Nongshim produces over 1 billion packages of instant noodles annually at its two U.S. plants while Pulmuone has been expanding manufacturing lines at its facility in Ayer, Massachusetts.

Other firms, however, are more vulnerable to potential trade risks. Samyang Foods, known for its spicy Buldak Ramen, continues to export products made in Korea to the United States. The same applies to companies like Paldo. Otoki has purchased land in California but has not yet secured the permits necessary to build a new plant.

"Even if companies begin building plants now, it will be difficult to avoid the impact of tariffs considering the time required for construction,” an industry insider said on condition of anonymity.

“A government-level response may be needed to address these challenges that the industry faces as a whole,” they added.

BY KIM KYUNG-MI [[email protected]]