Trump’s Tariff Hike on Canada and Mexico Puts Samsung, LG, and Hyundai on High Alert

On Saturday, U.S. President Donald Trump signed an executive order at Mar-a-Lago in Florida, imposing a 25% tariff on imports from Mexico and Canada (10% on Canadian energy) and an additional 10% tariff on Chinese imports.

This executive order will take effect on Tuesday.

This move by the Trump administration is expected to significantly impact U.S. companies with production facilities in Mexico and Canada.

Typically, tariff increases are reflected in consumer prices, reducing the competitiveness of imported goods in the U.S. market. South Korean electronics, automotive, and battery exports are likely to be particularly affected.

Samsung Electronics produces TVs at its Tijuana plant in Mexico and refrigerators and washing machines at its Querétaro plant. LG Electronics operates three factories in Mexico: Reynosa (TVs), Monterrey (refrigerators, ovens, and other appliances), and Ramos (automotive components).

For washing machines, both Samsung and LG have production facilities in the U.S.—in South Carolina and Tennessee, respectively—and can respond by increasing local production. However, the proportion of production in Mexico is substantial for products like TVs, which have a high supply volume to the U.S.

Although Samsung and LG have been stockpiling inventory in the U.S. in anticipation of tariff increases, once these stocks are depleted, they will inevitably face pressure to raise consumer prices due to the higher tariffs.

In the automotive industry, Kia exports approximately 120,000 units of the K4 model annually from its Monterrey plant in Mexico to the U.S. This year, the company plans to produce and export the EV3 from the same plant.

Hyundai Transys and Hyundai Mobis, the Hyundai Motor Group affiliates, manufacture vehicle transmissions and automotive parts in Monterrey.

However, since American companies like GM and Ford also produce vehicles in Canada and Mexico for sale in the U.S., analysts believe the impact on automotive companies may be relatively limited.

The tariff increases are also expected to affect the battery industry. In partnership with Stellantis, LG Energy Solution has built a plant in Windsor, Ontario, Canada, and began mass-producing battery modules in late 2024.

POSCO Future M has established a joint venture, Ultium CAM, with GM and is constructing a battery cathode material plant in Quebec with an annual capacity of 30,000 tons. It aims to start full-scale mass production this year. If a 25% tariff is imposed on these products, a decline in price competitiveness is unavoidable.

As of the first half of 2024, 525 South Korean companies had entered the Mexican market, investing over $685 million annually. In Canada, LG Energy Solution has invested nearly $1.3 billion.

A report by South Korea’s Industrial Research Institute titled “Analysis of the Effects of Trump’s Universal Tariffs” predicts that if the U.S. imposes a 25% tariff on Mexico and Canada and a 10% tariff on other countries, including China, South Korea’s exports to the U.S. will decrease by 13.6% for automobiles, 6.6% for batteries, and 8.8% for electrical and electronic products.

The report also estimates that the total export reduction will amount to approximately $9.1 billion, with a decrease in added value reaching $5.4 billion.

The bigger concern lies ahead. In 2024, South Korea recorded a trade surplus of $55.7 billion with the U.S., the largest in history. Consequently, there is a heightened possibility of increased trade pressure, including further tariff hikes.

Even if negotiations reduce overall tariff levels, specific products could face additional duties. Concerns about potential cuts to electric vehicle and semiconductor subsidies also exist. These issues could become entangled with renegotiations of the South Korea-U.S. Free Trade Agreement and defense cost-sharing.

In 2018, the Trump administration imposed 20-50% tariffs on South Korean washing machines, a move it touted as a major achievement.

On Monday afternoon, South Korea’s Ministry of Trade, Industry, and Energy held a countermeasure meeting presided over by Trade Minister Jeong In Kyo. The meeting discussed the U.S. tariff measures, their impact on domestic companies and exports, and possible response strategies.