South Korean Commerce Minister sees companies investing more in US if Trump imposes tariffs

South Korea’s trade minister said Wednesday he saw domestic companies investing more in the United States if the next U.S. administration introduces higher tariffs.

The official made his comments a few hours after Republican Donald Trump’s victory in the 2024 presidential election.

“If tariffs are raised, the first alternative that companies can consider will be to increase direct investment and on-site production,” Trade Minister Cheong In-kyo said in an interview with Reuters.

“There are already investments underway, and there is a possibility that investment will accelerate, followed by an increase in exports to the United States by small and medium-sized parts manufacturers,” Cheong said.

In recent years, South Korean companies have invested the most in the United States for the production of automobiles, especially electric vehicles, Cheong said.

Trump has floated the idea of ​​imposing blanket tariffs of between 10% and 20% on all imports to the United States, which a South Korean state think tank estimated last week would cause the trade-dependent economy to lose up to $44.8 billion. of dollars in exports.

Investment by South Korean companies in the United States amounted to $27 billion last year, about 44% of Korean companies’ total investment abroad, trade data showed. This percentage is the highest since 1998, as stated in May by the Korean Business Investment Association.

Cheong said the Ministry of Commerce has prepared ways to respond to various scenarios and will consult with the next administration after dialogue channels are established.

“Still, relations between South Korea and the United States will not be greatly affected even if the current situation remains unchanged,” Cheong said.

“We can only respond to the policy of the new administration. However, we will make efforts to keep trade fluid, not only with the United States, but also with China,” Cheong said, adding that the Chinese market was “the most important “.

Shares of South Korean battery and automakers including Hyundai Motor and LG Energy Solution fell on Wednesday, with analysts attributing the declines to concerns over potential tariffs.

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