South Korea is signaling a deeper alignment with Taiwan as both push back against U.S. plans to impose sweeping semiconductor tariffs — a tension that could reshape the global chip supply chain and geopolitical trade alliances.
Trade Minister Yeo Han-koo made headlines Monday in a radio interview when he floated the idea of cooperating with Taiwan to blunt the impact of U.S. President Donald Trump’s proposed chip duties.
“Taiwan is also in negotiations, so there is room for South Korea and Taiwan to get the most favorable treatment through cooperation,” Yeo said.
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His comments came just as Seoul inked a high-stakes deal with Washington. Under this agreement, the U.S. will maintain semiconductor tariffs at levels “no less favourable than terms … offered” to Taiwan for equivalent export volumes. That language was widely interpreted by South Korean officials as a direct reference to Taiwan’s own trade leverage.
U.S. Commerce Secretary Howard Lutnick has publicly played down the tariff issue, but South Korea’s presidential office insists the matter was central to the deal. Presidential spokesperson Kim Nam-jun confirmed that Seoul secured protection, ensuring its chip exports aren’t disadvantaged relative to Taiwan’s.
Layers of Incentive & Risk
Seoul’s urgency is underscored by stark market realities. South Korea’s semiconductor sector accounts for a massive share of its exports, and the threat of U.S. duties has pushed the government into overdrive. In April 2025, the country announced a sweeping 33 trillion won ($23.25 billion) support package to bolster the chip industry, up from 26 trillion won a year prior.
Key elements of the package include:
- 20 trillion won in low-interest loans for chipmakers (up from 17 trillion).
- Funding for R&D and workforce development — including programmes for master’s and doctoral students.
- Infrastructure improvements, most notably underground power transmission lines for semiconductor hubs in Yongin and Pyeongtaek — both key sites for Samsung and SK Hynix.
- Over $4.9 billion ($4.9B) more government capital will be injected through 2026 to ensure chip firms can weather the policy storm.
This fiscal lifeline reflects Seoul’s bet: even if U.S. tariffs bite, the long-term value of its chip industry justifies massive public investment.
A Strategic Truce — Or a Tactical Move?
To many analysts, Yeo’s call for cooperation with Taiwan is less a gesture of friendship and more a strategic maneuver. With both countries deeply exposed to U.S. chip policy, aligning could give them leverage in Washington — especially if Taiwan secures favorable terms first.
South Korea, Japan, and Taiwan have all voiced concern over Trump’s tariff strategy. In coordinated commentary submitted to the U.S. Commerce Department, they warned against applying broad Section 232-style restrictions on semiconductor imports, arguing that such tariffs would raise costs for the U.S. and destabilize the supply chain.
Seoul’s trade agreement reflects that pressure. According to a fact sheet from the deal, semiconductor tariffs will be applied “at a level not disadvantageous compared with Taiwan.”
Meanwhile, Washington and Seoul plan to set up joint investment and consultative bodies to guide future projects — a clear signal that this is not a one-off trade deal, but part of a broader strategic alignment.
The Tech & Geopolitics Stakes
For Taiwan, cooperation with South Korea under these terms could help solidify its negotiating posture — especially as Taiwan is simultaneously expanding its U.S.-based manufacturing footprint. As reported, Taiwan has pledged not to transfer its most advanced chip-making technology to the U.S. under recent investment deals — a major red line for Taipei.
Yet those deals come with trade-offs. More investment in U.S.-based fabrication may raise long-term costs for Taiwan while reducing some of its geopolitical leverage — notably the so-called “silicon shield” that strengthens its security posture.
On the South Korean side, major firms are already moving aggressively. Samsung, for instance, announced plans to invest 450 trillion won ($310 billion) over five years in domestic capacity, including a new production line at Pyeongtaek and AI data centers across the country.
By doing so, Seoul is signaling that even as it cooperates with Washington, it will not abandon its home base or global technological ambitions.
Weighing the Stakes
If Seoul and Taipei can align their demands, they stand to gain a powerful negotiating bloc. But the alliance is delicate. Taiwan must guard its most advanced processes, and South Korea must prevent its domestic industry from hollowing out in favor of U.S. investment.
And from Washington’s perspective, managing this coalition is no small feat. Trump’s tariff plans — rooted in national security arguments — force the U.S. to balance its industrial ambitions against the geopolitical necessity of keeping East Asia engaged in its semiconductor supply chain.
In the coming months, the world will be on the lookout for answers to the following questions:
- Will Taiwan and South Korea formalize their cooperation publicly — or operate more quietly behind the scenes?
- How far will U.S. officials go to craft differentiated tariff terms?
- And will the billions flowing into South Korea’s chip sector today prove enough to preserve the nation’s technological edge?
The answers could reshape not just regional trade, but the global architecture of semiconductor supply chains — at a time when chips are becoming one of the most powerful currencies in geopolitics.