March 6, 2025
SEOUL – US President Donald Trump said that South Korea’s tariffs are on average four times higher than those of the US, despite American military support, indicating reciprocal tariffs could take effect from April 2 as he made the case for his tariff policy.
Delivering his remarks at his first address to a joint session of the US Congress on Tuesday, Trump also called for an end to the $52 billion CHIPS and Science Act, a move that has put Korean chipmakers on edge.
“Countless other nations charge us tremendously higher tariffs than we charge them. It’s very unfair,” Trump said. “India charges us auto tariffs higher than 100 percent. China’s average tariff on our products is twice what we charge them.”
“Korea’s average tariff is four times higher. Think of that — four times higher — and we give them so much military support and other assistance. But that’s what happens, from both friends and foes,” Trump added, confirming that the US will impose reciprocal tariffs starting April 2.
In a statement issued later in the day, Seoul’s Industry Ministry explained that Korea’s Most Favored Nation tariff rate is 13.4 percent — compared to the US rate of 3.3 percent — but this rate applies only to World Trade Organization member countries without a bilateral agreement.
“Under the Korea-US Free Trade Agreement, which took effect in 2012, both countries have eliminated tariffs on most goods. As of 2024, the nation’s effective tariff rate on US imports stands at approximately 0.79 percent,” said a ministry official.
The official added that the ministry will actively engage in dialogue with the US to clarify the facts through various communication channels.
Last week, Korean Industry Minister Ahn Duk-geun traveled to the US to request a tariff exemption in talks with the US administration, meeting with Commerce Secretary Howard Lutnick, Interior Secretary Doug Burgum and Trade Representative Jamieson Greer, among others.
Trump also indicated his intention to repeal the bipartisan CHIPS and Science Act, calling it “horrible.”
“The CHIPS Act is a horrible, horrible thing. We give hundreds of billions of dollars, and it doesn’t mean a thing. They take our money, and they don’t spend it,” Trump said during his speech.
“You should get rid of the CHIPS Act, and whatever is left over, Mr. Speaker, you should use it to reduce the debt.”
For Korean chipmakers, which have committed tens of billions of dollars to build advanced semiconductor manufacturing facilities in the US, the potential repeal of the CHIPS Act could deliver a significant blow.
Samsung Electronics is investing over $37 billion to build leading-edge chip fabrication plants in Texas, and has been set to receive up to $6.4 billion in grants under the CHIPS Act.
SK hynix is also constructing a $3.87 billion advanced chip packaging facility in Indiana and was promised up to $458 million in federal funding from the US government.
If the CHIPS Act is repealed, Korean semiconductor firms may have to reconsider their US investment strategies, raising further uncertainty in the industry.
During his speech, Trump also mentioned South Korea’s potential participation in a major natural gas pipeline project in Alaska, calling it one of the largest in the world.
“My administration is working on a gigantic natural gas pipeline in Alaska — one of the largest in the world — where Japan, South Korea and other nations want to be our partners, with trillions of dollars being invested by them. It will truly be spectacular,” Trump said.
However, Korea’s Industry Ministry said it remains too early to confirm the country will be involved in the project.
“It is too early to confirm Korea’s participation in the project. The two countries have agreed to explore possibilities, but various factors need to be considered before finalizing a decision,” the ministry official stated.
With the pressure from Trump’s tariff proposals, participation in the Alaska liquefied natural gas project is seen as a potential negotiating chip for Korea.