South Korean President Lee Jae Myung has played down concerns about proposed U.S. tariffs on semiconductor imports. He stated that such duties would likely increase chip prices in the United States. U.S. Commerce Secretary Howard Lutnick recently suggested tariffs of up to 100% for South Korean and Taiwanese chipmakers. These tariffs would apply unless the firms commit to increased production on American soil. Consequently, Lee argued the costs would largely pass to U.S. consumers and businesses. He cited the dominant market position of Samsung, SK Hynix, and TSMC, which control 80-90% of key segments.
President Lee addressed the issue at a news conference on Wednesday. He emphasized that South Korea has safeguards under an existing trade agreement with the U.S. These measures ensure its chipmakers will not face a disadvantage against Taiwanese or other global competitors. The comments come as South Korea celebrates record exports, driven by a 22% jump in semiconductor shipments. Therefore, Lee’s tone was confident, framing the tariff threat as more damaging to the U.S. than to South Korea’s industry.
Market Dominance and the Logic of Price Pass-Through
President Lee’s argument hinges on simple market economics. Samsung and SK Hynix dominate the global memory chip market. TSMC holds a similar position in chip contract manufacturing. Because these companies supply the vast majority of these essential components, they possess significant pricing power. If the U.S. imposes a 100% import duty, these firms can raise their prices to offset the tax. American companies, which need these chips, would have little choice but to pay.
This dynamic means the tariff’s primary effect would be inflationary in the U.S. It would increase costs for American electronics manufacturers, data center operators, and carmakers. Eventually, these higher costs would filter down to consumer prices for phones, computers, and other goods. Lee’s message is clear: the proposed policy would hurt the U.S. economy more than it would pressure Asian chipmakers to build U.S. factories.
Context of South Korea’s Record Semiconductor Exports
Lee’s confident stance is bolstered by strong trade data. South Korea’s exports hit a record $709.4 billion in 2025. Semiconductor shipments surged 22%, fueled by massive global investment in artificial intelligence. This growth underscores the critical, high-demand nature of the products the U.S. seeks to tariff. Interestingly, China remained the largest market for South Korean chips, followed by Taiwan and Vietnam. The United States accounted for only 8% of total semiconductor exports.
This export structure provides South Korea with some insulation. While the U.S. market is important, it is not the largest. Diversified global demand reduces leverage for U.S. tariff threats. Furthermore, the existing U.S.-Korea trade agreement provides a framework for dispute resolution. Lee indicated these safeguards would protect South Korean interests, suggesting diplomatic channels may blunt the tariff threat before implementation.
Additional Topics: Won Currency and North Korea Policy
President Lee also addressed other economic and diplomatic issues. He commented on the slumping South Korean won, predicting it would strengthen to around 1,400 per dollar within months. He cautioned that domestic policy alone could not stabilize currency markets, noting correlation with the weak Japanese yen. However, he stated the won was performing comparatively better.
On North Korea, Lee said he is pursuing diplomatic efforts to resume U.S.-North Korea dialogue. He advocated a pragmatic approach, focusing on halting nuclear material production and ICBM development. Lee expressed skepticism that Pyongyang would fully abandon its nuclear program. He revealed North Korea is producing enough material for 10-20 nuclear weapons annually. These remarks outline a realistic, step-by-step diplomatic strategy rather than seeking an immediate grand bargain.
Crackdown on Religious Influence in Politics
In a notable domestic aside, Lee stressed the need to root out religious influence in politics. He affirmed the principle of separation of church and state must never break. Parliament is currently reviewing a bill for a special prosecutor to investigate the Unification Church’s political involvement. The debate includes whether to extend the probe to the Shincheonji Church.
The head of the Unification Church, Han Hak-ja, is on trial for allegedly bribing associates of former President Yoon Suk Yeol. She denies wrongdoing. Lee’s strong stance signals a commitment to combating corruption and undue influence, a recurring issue in South Korean politics linked to certain religious organizations.
Strategic Calm in the Face of Trade Pressure
Overall, President Lee’s comments project strategic calm. He acknowledges the tariff proposal but minimizes its perceived threat to South Korea. By highlighting the backlash it would cause in the U.S., he positions Seoul for negotiations from a place of strength. His focus remains on sustaining South Korea’s export boom and managing key diplomatic relationships with Pyongyang and Washington. The approach suggests a confident, economics-first response to geopolitical trade pressure.
