Searching for low wages, South Korean tech big Samsung Electronics has constructed factories in Vietnam for years, with almost half its high-end cell phones now put collectively within the southeast Asian nation. (Picture by Nhac NGUYEN / AFP)
Vietnam — Sipping tea on her break exterior a Samsung Electronics manufacturing facility in northern Vietnam, employee Nguyen Thi Mai mentioned she had heard about US President Donald Trump’s tariffs. However she hoped it could not have an effect on enterprise.
Samsung, the world’s second-largest cellphone maker, produces round half of its handsets in Vietnam.
Trump’s menace to impose a 46-percent tariff menace on the nation despatched shockwaves by way of the South Korean big’s provide chains.
“We don’t perceive a lot about macro points,” 27-year-old Mai instructed AFP. Every day life contained in the manufacturing facility in Bac Ninh province was unaffected. This, regardless of international market whiplash from on-again-off-again US levies.
“Our work goes on usually,” agreed Le Van Binh, 30. He hoped the Vietnamese authorities would be capable of work out a deal.
“Our high leaders are arranging to barter with the USA. I hope they are often profitable and issues might be good for all of us.”
Samsung turned to Vietnam as a result of labor prices are “about one-tenth of these in South Korea”, Kim Dae-jong, a professor at Sejong College, instructed AFP.
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However US tariff threats — even after Trump abruptly paused them on Wednesday — are actually shaking the logic that has underpinned many years of speedy progress and manufacturing funding in growing Asian economies, he mentioned.
If Samsung “absolutely absorbs” the proposed tariff value as a substitute of shifting manufacturing elsewhere, “roughly 4 trillion gained ($2.7 billion) can be immediately uncovered”, mentioned Kim Dong-won, managing director at KB Securities.
That quantity represents some 33 % of Samsung’s smartphone working revenue.
Samsung has constructed up stock, and this week forecast file outcomes for the primary quarter of 2025. And there’s scope for negotiations between Hanoi and Washington, he mentioned — besides, it’s regarding.
‘Reallocating manufacturing’
If Trump does observe by way of, Samsung and fellow South Korean big LG could haven’t any alternative however to shift their investments to the USA, mentioned Kang In-soo, an economics professor at Sookmyung Ladies’s College.
LG has additionally invested closely in Vietnamese factories.
“Regardless of the extra prices concerned, this seems to be an inevitable determination to keep up or broaden their presence within the strategically vital US market,” he mentioned.
For Samsung, high-end televisions are their key driver of income stateside, Yong Seok-woo, president and head of the visible show enterprise at Samsung Electronics instructed reporters.
“Many of the TVs bought in North America are produced in Mexico,” mentioned Yong.
Mexico dodged Trump’s newest spherical of tariff threats — probably leaving Samsung in a greater place than many rivals.
“We now have 10 manufacturing websites worldwide,” Yong added.
“We plan to beat these challenges by reallocating manufacturing primarily based on tariff situations.”
Home base?
The tariff threats look like aimed toward securing further overseas funding. However the USA lacks a powerful home base to provide the high-end chips — the lifeblood of the worldwide financial system. Thus, many specialists count on they won’t final in the long run.
Trump’s determination to pause the imposition of the levies sparked euphoria on international markets on Thursday — however he raised tariffs on China to 125 % due to a “lack of respect”.
Apple, Samsung’s chief rival, produces the majority of its iPhones in China.
Sky-high tariffs “may impose substantial prices on US-based semiconductor shoppers”, mentioned Kang of Sookmyung Ladies’s College. The worry of worth will increase is already sparking iPhone panic shopping for.
Nonetheless, “it’s anticipated that the tariffs might be adjusted downward as soon as a adequate stage of funding is secured”, Kang added.
Samsung’s publicity underscores the broader vulnerability of export-driven Asian economies.
In 2024, web exports accounted for greater than 90 % of South Korea’s complete financial progress.
The nation has been significantly ill-prepared to face the financial headwinds. It has been successfully leaderless since December, when impeached former president Yoon Suk Yeol declared martial legislation.
Officers are scrambling to comprise the fallout. Performing chief Han Duck-soo spoke to Trump this week. The commerce minister additionally flew to Washington for emergency talks.
The federal government introduced a battery of help measures for South Korea’s beleaguered automobile makers on Wednesday. The trade is hit by sector-specific 25 % tariffs. However they should do extra to assist the nation’s export-focused conglomerates, specialists mentioned.
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Seoul should “deal with a proactive response to US tariff measures and swiftly implement a supplementary price range to stave off a deeper financial downturn,” Kang mentioned.
