Korean firms must bolster planning, highlight role in US economy under Trump 2.0: expert

As Donald Trump assumes office for a second term on Monday, South Korean businesses are bracing for sweeping changes in US trade policies that could thrust them into considerable uncertainty.

From potential tariff hikes to aggressive trade strategies and the rollback of green initiatives, Korea’s export-driven companies are gauging the risks and opportunities in the world’s largest economy.

Amid these potential disruptions, firms must be equipped with “robust scenarios” and engage effectively with US policymakers, advises Jennifer Lee, a principal at The Asia Group, a Washington, DC-based advisory firm. TAG specializes in public policy consulting for companies expanding into the Asia-Pacific region and works closely with numerous Korean firms operating in the US.

“They should have a very robust, solid scenario analysis. If Trump implements one of these policies, it’s not a surprise, and (companies) have to be prepared to move very quickly,” Lee told The Korea Herald in an interview last week, in reference to anticipated tariffs and shifts in trade policies.

Specifically, she said firms need to evaluate where they can reorganize their supply chains, understand the cost implications for their manufacturing facilities and have contingency plans in place.

Lee also emphasized the need for Korean companies to beef up their government affairs strategies to influence US regulators in a “smart way.” They need to gain better access to the executive branch and congressional offices, and clearly communicate the impact the policies will have on their businesses, which are “trying to invest in the US and create jobs.”

“A lot of companies are starting to do that, especially the bigger conglomerates in the US, but it’s always good to be very strategic about it,” she said. “They are investing a lot, so make sure that they are able to leverage it in a very nuanced and smart way.”

The message that Korean firms need to convey is, “The US needs Korean companies as part of its global supply chain,” especially as the US shifts away from its reliance on China, she noted.

Over the past three years, Korean conglomerates like Samsung, Hyundai, SK, LG and Hanwha have invested over $114 billion in the US, building plants and creating jobs, according to the State Department.

“Korean companies now have the ear of the US government. The policymakers are very much interested in what the Korean companies are actually doing and even the challenges that they are facing,” said Lee.

“It’s important to be able to leverage that environment, continue to nurture that relationship, voice concerns and be able to eventually be a stakeholder where they can influence the policies as well.”

Regarding potential changes to key Biden-era policies, such as the CHIPS and Science Act — which offers subsidies for setting up chip factories in the US — Lee believes it is unlikely to be repealed.

This is because many of these investments are in Republican states and there isn’t strong congressional support for changing the CHIPS Act. “In general, I believe that Trump won’t necessarily repeal it but it is also likely that he will not provide further funding.”

Under the bill, Samsung Electronics committed $37 billion to expand its chip facilities in Texas, receiving $4.75 billion in subsidies. Similarly, SK hynix pledged $3.87 billion to build an advanced chip packaging plant in Indiana, securing $458 million in subsidies.

But Lee warned of potential delays in distributing the funds. “Even if everything is signed, it doesn’t mean that the money is going to be disbursed in a timely manner. So those are the challenges that the Korean companies that have invested in the US will face.”

And these companies will have to “continue to reevaluate whether to continue investing in those facilities,” depending on the environment.