U.S. Chip Tariffs Reshape Global Supply Chains: What’s at Stake for Korea?

A recent signal from Washington has put Korean industry on edge.

The US is reportedly considering a plan to impose tariffs on imported electronic products based on the number of semiconductors they contain.

This goes beyond simply distinguishing the country of origin of a chip; it means calculating tariff rates according to how many chips are built into each product.

Why is this idea emerging?

Since last summer, the Trump administration has floated the so-called 1:1 chip production rule—for every imported chip, one must be produced domestically in the U.S. If such a rule were enforced, companies lacking sufficient U.S. manufacturing capacity could face tariffs as high as 100%.

At the same time, Washington has hinted that firms committing to major U.S. investments might receive exemptions.

For Korean companies, the situation is complicated. Both Samsung and SK Hynix have investment plans in the U.S., but given construction timelines and realistic production capacity, meeting a strict “1:1 requirement” in the short term is unlikely.

On top of this, the Korean government has openly rejected Washington’s proposal that Seoul provide a $350 billion upfront investment in the U.S., calling it “unrealistic.” This sets the stage for even tougher negotiations.

What kinds of problems could arise?

First and foremost, the criteria are highly uncertain.

If tariffs are based on the sheer “number” of chips, there is a risk of treating a simple memory chip and a high-value logic chip as if they were equal.

Questions also remain about when tariffs would take effect, how exemptions would be determined, and how the rules would be enforced—all of which make it very hard for exporters to plan ahead.

Second, price competitiveness is at stake. If new tariffs are imposed, the cost of Korean semiconductor-based products in the U.S. will rise, and the burden will be shared between companies and consumers.

Margins could shrink, and smaller firms may find the costs impossible to absorb.

Third, supply chain restructuring pressure will intensify. To avoid tariffs, companies will be pushed to expand manufacturing in the U.S. or relocate some assembly and processing to third countries. But such adjustments require significant time and resources, making them a difficult near-term solution.

Finally, the risk of diplomatic friction and trade retaliation cannot be ignored.

Even U.S. allies such as Japan and the EU could oppose such measures, potentially filing WTO disputes or introducing counter-tariffs.

The Bank of Korea has already warned that autos, steel, and semiconductors would all take a hit if tariffs move forward. In fact, while Korean semiconductor exports have barely sustained overall trade performance this year, auto exports to the U.S. have already declined. A new wave of tariffs could tip this fragile balance.

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What should we watch next?

This issue is not just a concern for Korean chipmakers.

It represents a broader U.S. attempt to write new trade rules centered on semiconductors and to reshape global supply chains in line with its strategic priorities.

For companies, the critical choice is whether to double down on U.S. investment or pursue more aggressive supply diversification. For the Korean government, the challenge will be whether it can secure meaningful concessions at the negotiating table while containing the potential fallout across industries.

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