The global trading order will shift dramatically at 12:01 a.m. Eastern Time on Aug. 7, as the United States enters a new phase of reciprocal tariffs. Seven months after Donald Trump’s return to the White House, the tariff regime he vowed to implement is now taking effect, redrawing supply chains across Asia and threatening to unwind decades of trade liberalization.
South Korea—long a beneficiary of free trade with the United States—is not spared. Korean exports are now subject to a 15 percent tariff, part of a sweeping rollback of postwar liberal trade rules.
The blow is even heavier for Korean companies reliant on production bases in Vietnam, India, and Thailand, where tariffs near 20 percent have accelerated what industry insiders are calling a once-in-a-generation realignment of global manufacturing.
“This is not simply a matter of shifting production from one country to another,” said a senior executive at a major South Korean exporter. “We’re recalibrating everything—production costs, relocation expenses, and logistics to the U.S. Political risk is now a central variable in determining factory locations.”
Cosmetics
Among the fastest movers are Korea’s cosmetics producers. Last year, Korean beauty exports to the United States totaled $1.701 billion, surpassing France—home to brands like Chanel and Dior—for the first time.
Until now, original development manufacturers (ODMs) like Cosmax and Kolmar Korea had championed a “Made in Korea” model. But the 15 percent levy has prompted both companies to accelerate U.S.-based production.
Kolmar Korea last month launched a second facility in Pennsylvania, boosting its annual production capacity in the U.S. to 300 million units. “We expect full utilization in the second half,” a company spokesperson said.
Cosmax, which already operates plants in New Jersey and other global sites, added that “many clients are weighing the costs of local manufacturing versus the tariff. We intend to expand our U.S. output to meet this demand.”
Home appliances
Korea’s electronics and home appliance makers are shifting production to Mexico to take advantage of zero-tariff provisions under the US–Mexico–Canada Agreement (USMCA). Output from legacy hubs such as Vietnam, India, and Thailand is being scaled back as manufacturing migrates to North America.
LG Electronics relocated part of its Vietnam production to Mexico earlier this year and plans to bring a new plant online in Mexicali by September. Samsung Electronics is also ramping up output in Mexico, while exploring expanded operations at its washer plant in South Carolina.
Appliance makers face a second hit: a 50 percent tariff on steel derivatives. Steel content typically accounts for 10 to 20 percent of refrigerator and washing machine costs. At a base cost of 1 million won, that equates to a 100,000-won levy on embedded steel alone.
Samsung is also bracing for a potential wave of new tariffs on semiconductors and mobile devices, with decisions expected later this month. “Products like smartphones and tablets are reportedly under review,” said Park Soon-chul, chief financial officer of Samsung Electronics, during its second-quarter earnings call. “We are assessing both the risks and opportunities to contain the impact.”
Autos
South Korea’s automakers are similarly accelerating U.S.-based production. Hyundai Motor Group plans to increase U.S. output from 1 million to 1.2 million vehicles per year across its facilities in Alabama, Georgia, and the new HMGMA plant. A task force has also been set up to localize parts sourcing and offset tariff costs.
During a recent earnings call, Hyundai said it had received bids on more than 200 components and is evaluating the optimal balance between exports and local procurement.
Apparel
The fashion industry—historically dependent on low-cost Southeast Asian hubs like Bangladesh, Vietnam, and Indonesia—is scrambling to respond to tariffs ranging from 19 to 20 percent.
Apparel giant Hansae is boosting production in Nicaragua (18 percent tariff) and investing in its U.S.-based subsidiary Texollini, which it acquired last year. It is also building a large-scale facility in Guatemala, where tariffs stand at 10 percent.
“U.S. brands still call the shots,” said one executive at a Korean fashion exporter. “They’re pushing the tariff burden onto manufacturers, and we’re the ones racing to adapt.”
Pulp, paper, and tractors
Other sectors are also under strain. Korea’s paper industry, which exported roughly 700 billion won ($540 million) to the U.S. last year, is losing ground to Canadian competitors who continue to enjoy tariff-free access under USMCA.
Farm equipment producers face similar hurdles. While Korea’s 15 percent tariff aligns with rates for Japanese (15 percent) and Indian (25 percent) rivals, softening global demand is limiting the ability to pass higher costs onto consumers.
Jang Sang-sik, head of the Institute for International Trade at the Korea International Trade Association, said: “The era of globalization and free trade is giving way to protectionism and a new form of mercantilism. Korea must now upgrade its industrial competitiveness to navigate these rising trade barriers.”