U.S. semiconductor tariff bill comes into focus, forcing Seoul to prepare

Caution is necessary, but a purely defensive posture would be risky. With semiconductor demand in the United States rising sharply, Washington also faces limits in raising tariffs indiscriminately.

Commerce Secretary Howard Lutnick speaks during an event with President Donald Trump in the Oval Office of the White House on Jan. 14 in Washington. [AP/YONHAP]

As Washington’s proposed semiconductor tariff regime takes clearer shape, calculations in both government and corporate circles in Korea are growing more complex. After concluding a semiconductor agreement with Taiwan, U.S. officials have raised the pressure on other major exporters, signaling that tariffs are no longer a hypothetical threat.

At the heart of the policy is a direct linkage between semiconductor tariffs and investment in the United States. On Jan. 16, U.S. Commerce Secretary Howard Lutnick delivered a blunt message at the groundbreaking ceremony for a new plant by Micron Technology. “If you want to make memory chips,” he said, “you have two choices: pay a 100 percent tariff or produce them in the United States.” The warning was unmistakable. Companies that do not invest in U.S.-based production will face steep tariffs.

Washington’s strategy was made explicit in the semiconductor agreement announced with Taiwan on Jan. 15. Taiwan pledged a total of $500 billion in semiconductor investment, including $250 billion by TSMC, the world’s largest contract chipmaker. In return, the United States granted a tariff-free semiconductor quota. The more chips produced in the United States, the larger the volume exempt from tariffs.

This is where concerns deepen for Korea’s government and chipmakers. The Taiwan deal risks becoming a de facto benchmark. A clause in the Korea-U.S. tariff negotiation fact sheet stating that Korea should not receive treatment less favorable than countries with larger semiconductor trade volumes with the United States, namely Taiwan, could prove a double-edged sword. Matching Taiwan’s scale may be unavoidable. By comparison, U.S. investments announced by Samsung Electronics and SK hynix total about $41 billion, leaving room for Washington to push for additional commitments.

In response, the presidential office said it would continue consultations to minimize the impact on Korean firms, in line with the principle of non-discrimination. Caution is necessary, but a purely defensive posture would be risky. With semiconductor demand in the United States rising sharply, Washington also faces limits in raising tariffs indiscriminately. This leaves space for coordinated public-private negotiations that balance firmness with flexibility.

Semiconductors account for roughly 30 percent of Korea’s exports and are its second-largest export item to the United States. As petrochemicals, steel and batteries lose ground to Chinese competitors, chips remain Korea’s most critical global advantage. If Seoul fails to negotiate effectively and is simply pulled along by U.S. demands, the consequences for Korea’s economic future would be severe.

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.