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Korean trade officials scramble to determine impact of Trump's AI chip tariff

Published: 15 Jan. 2026, 19:03

Kim Seong-yeol, left, director general for industrial infrastructure at the Ministry of Trade, Industry and Resources, delivers opening remarks as he chairs an emergency meeting with public and private sector officials at the Korea Chamber of Commerce and Industry building in Jung District, central Seoul, on Jan. 15, to assess the impact on Korea’s semiconductor industry of U.S. semiconductor tariffs announced a day earlier and to discuss response measures and future talks with Washington. [MINISTRY OF TRADE, INDUSTRY AND RESOURCES]

WASHINGTON — Korean officials, including the country's chief trade negotiator, began an urgent review of the potential fallout from U.S. President Donald Trump’s new tariff on AI semiconductors, a move that has raised fresh uncertainty for an industry that makes up one of Korea’s largest exports to the United States.

Trump on Wednesday signed a proclamation and an executive order imposing a 25 percent tariff on advanced AI chips made by Nvidia and AMD and shipped to China, framing the measure as a revenue-generating trade action rooted in national security law.

Trump said the tariff was authorized under Section 232 of the Trade Expansion Act, which allows the president to restrict imports deemed a threat to national security. The same statute has underpinned previous U.S. tariffs on steel, aluminum and automobiles. He also signaled that the scope of the measure could expand.

The announcement prompted Trade Minister Yeo Han-koo to delay his return home as Seoul sought clarity on whether semiconductors — one of the country’s three largest exports to the United States — could become subject to broader U.S. sectoral tariffs.

Trade Minister Yeo Han-koo speaks with reporters at Union Station in Washington on Jan. 14. [NEWS1]

Speaking to reporters at Washington’s Union Station, Yeo said he would remain in the capital for an additional day to assess the situation. “New executive orders related to semiconductors and critical minerals were announced, so I decided to stay one more day to better understand what is actually happening,” he said.

Yeo added that it was too early to draw firm conclusions. “We are still carefully reviewing the proclamation and the executive orders,” he said. “I want to determine what impact this could have on us and whether there are additional meetings we need to hold with U.S. officials while we are here.”

Korean government officials said the immediate impact on domestic companies was likely to be limited, noting that the measure was explicitly aimed at China.

“For now, this action targets China,” a government official told the JoongAng Ilbo. “The direct effect on Korean firms is expected to be minimal.”

Unlike China, Korea is not subject to U.S. export controls or licensing requirements for advanced semiconductors. “Nvidia’s planned large-scale chip supplies to Samsung Electronics and Hyundai Motor involve products made by TSMC and shipped directly to Korea,” the official said.

Nvidia CEO Jensen Huang, right, speaks alongside U.S. President Donald Trump about investing in America at the White House in Washington on April 30, 2025. [AFP/YONHAP]

If Taiwanese-made chips are shipped straight to Korea without passing through the United States, the reexport tariff mechanism would not apply. In addition, Korea’s key semiconductor exports to the United States, including dynamic random-access memory chips, are primarily intended for the U.S. domestic market, making them less vulnerable to the new tariff.

Still, officials and analysts voiced concern about downstream effects. If the United States extends sectoral tariffs to derivative products containing semiconductors, such as smartphones and consumer electronics, Korean manufacturers could be put at a price disadvantage.

Some diplomatic sources expressed skepticism that Trump would pursue such measures ahead of the midterm elections, given the risk of fueling inflation. Tariffs on semiconductor-based products would likely push up prices not only for Samsung Electronics’ Galaxy smartphones but also for Apple’s iPhones and a broad range of consumer electronics sold in the United States.

A diplomatic source said Trump may have turned to tariffs after concluding that existing export laws did not provide a clear legal basis for reclaiming a share of chip export revenues.

“This move may also serve a political purpose,” the source said, “allowing the administration to highlight a rapid increase in Treasury revenue ahead of the election.”

‘China wants them’

U.S. President Donald Trump holds a bill to return whole milk to school cafeterias across the country in the Oval Office of the White House in Washington on Jan. 14. [AP]

Under the proclamation, the United States will allow exports to China of certain high-end AI chips, including Nvidia’s H200 and AMD’s MI325X, while imposing a 25 percent tariff on the volume sold to Chinese customers. The tariff revenue will be returned to the U.S. Treasury.

Trump portrayed the policy as a financial and strategic gain for Washington.

“China wants them and other people want them,” he said on Wednesday. “The United States is getting 25 percent of the chips in terms of the dollar value, and I think it’s a very great deal.”

While Trump did not name the specific chips covered by the tariff, he contrasted Nvidia’s most advanced processors — Blackwell and the upcoming Rubin — with other products, saying, “It’s not the highest level, but it’s a pretty good level,” a remark pointing to the H200.

Trump had initially announced the move last month, saying he would allow exports of the H200 to China provided that 25 percent of the sales value was paid to the United States. The U.S. Commerce Department finalized revisions to its related export rules the day before the proclamation was signed.

Reexport mechanism singles out Nvidia

Nvidia founder and CEO Jensen Huang speaks about the Vera Rubin AI platform during a question and answer session with reporters at the annual Consumer Electronics Show in Las Vegas, Nevada, on Jan. 6. [AFP/YONHAP]

White House officials described the tariff as narrowly focused on semiconductors that enter the United States but are not used domestically.

Will Scharf, the White House staff secretary, said the measure applies to chips “transshipped through the United States to other foreign countries,” rather than those used to build AI or computing infrastructure at home.

That structure effectively targets Nvidia, whose chips are almost entirely manufactured by TSMC and are shipped first to the United States before being sent overseas. If the tariff is applied during that transit process, Chinese buyers would end up paying at least 25 percent more than U.S. customers for the same chips.

Trump again emphasized on Wednesday that Section 232 gives the president broad authority to restrict or adjust imports that pose a risk to U.S. national security.

A White House fact sheet released the same day reinforced that warning, stating that the administration could soon impose “broader tariffs on imports of semiconductors and their derivative products [...] to incentivize domestic manufacturing.”

The proclamation also directs the U.S. government to begin negotiations with trading partners over critical mineral imports, with the possibility of setting minimum import prices for certain minerals if deemed necessary for national security.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KANG TAE-HWA [[email protected]]