South Korea Plays Down Immediate Fallout from U.S. Chip Tariffs, But Warns Risks Still Loom

South Korea is projecting calm in the immediate aftermath of the United States’ decision to impose a 25% tariff on certain advanced artificial intelligence chips, but beneath the reassurance lies a deeper unease about where Washington’s semiconductor policy is heading and what it could ultimately mean for Asia’s chip powerhouses.

Trade Minister Yeo Han-koo said on Saturday that the first phase of the U.S. measures would have only a limited impact on South Korean companies, largely because the tariffs target high-end AI processors produced by firms such as Nvidia and AMD, rather than the memory chips that dominate South Korea’s export profile. Samsung Electronics and SK Hynix, the world’s two largest memory chipmakers, derive the bulk of their semiconductor revenue from DRAM and NAND products, which remain outside the scope of the proclamation for now.

Yet Yeo’s remarks were careful not to sound complacent. He warned that it was “not yet time to be reassured,” underlining uncertainty over how quickly and how broadly the United States might expand the measures. The government, he said, would continue close consultations with industry to prepare for potential escalation and to safeguard South Korean interests.

The tariffs stem from a proclamation signed by President Donald Trump on Wednesday following a nine-month investigation under Section 232 of the Trade Expansion Act of 1962, which allows the U.S. to restrict imports deemed a threat to national security. The initial action applies a 25% duty to selected advanced AI chips that meet specific performance benchmarks, including Nvidia’s H200 processor and AMD’s MI325X, both critical components in cutting-edge AI training systems.

The White House has sought to reassure markets by stressing that the tariffs are narrowly tailored. According to an accompanying fact sheet, the duties will not apply to chips and derivative devices imported for U.S. data centers, startups, non-data-center consumer electronics, civil industrial uses, or public sector applications. That carve-out is significant, given that hyperscale data centers account for a substantial share of global demand for AI hardware and remain a key end market for memory chips supplied by South Korean firms.

However, the administration has also been explicit that broader action could follow. The fact sheet said the United States may, in the near future, impose wider tariffs on semiconductors and related products to incentivize domestic manufacturing. That warning was sharpened on Friday by Commerce Secretary Howard Lutnick, who said South Korean and Taiwanese chipmakers that do not invest more heavily in U.S. production could face tariffs of up to 100%.

Lutnick’s comments, delivered at a groundbreaking ceremony for Micron’s new semiconductor plant in upstate New York, underscored the strategic thrust of U.S. policy. Washington is using trade pressure alongside subsidies to accelerate the reshoring of semiconductor manufacturing and reduce dependence on overseas suppliers, particularly in Asia.

This creates a delicate balancing act for South Korea. Its chipmakers are already among the largest foreign investors in U.S. semiconductor manufacturing, drawn by incentives under the CHIPS Act and by the need to stay close to key customers. Samsung is building a multibillion-dollar fabrication complex in Texas, while SK Hynix has announced plans linked to advanced packaging and memory production in the United States.

Even so, the prospect of expanding tariffs raises concerns that trade measures could eventually spill over from logic and AI processors into memory chips or products that incorporate them. That would strike at the core of South Korea’s export economy. Semiconductors account for a significant share of the country’s overseas sales, and any disruption to global chip trade risks knock-on effects for growth, investment, and employment.

There is also anxiety about the precedent being set. Section 232 investigations were once used sparingly, but their application to semiconductors signals a more assertive use of national security arguments in trade policy. For allies like South Korea, which are deeply integrated into U.S.-centric supply chains, this blurs the line between strategic cooperation and economic pressure.

In the short term, analysts say South Korean firms are likely to benefit indirectly from the tariffs, as U.S. restrictions on advanced Chinese chips tighten and demand for memory tied to AI workloads continues to grow. Over the longer term, however, the risk is that an expanding web of tariffs and localization requirements fragments the global semiconductor market, raising costs and complicating investment decisions.

Yeo’s message reflects that dual reality. The first-phase impact may be limited, but the trajectory of U.S. policy points to a more uncertain and politicized trade environment. The challenge for South Korea will be to leverage its strategic importance to the U.S. semiconductor ecosystem while guarding against measures that could, over time, erode the foundations of its chip export dominance.