Samsung Electronics’ factory in Vietnam. (Samsung Electronics)

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South Korean companies are in emergency mode after the United States announced sweeping reciprocal tariffs earlier this week, sparking concerns of a significant threat to global supply chains.

“Vietnam, India, and Korea have all been hit with higher-than-expected tariffs,” said an official from the conglomerate circle. “This is the most serious trade crisis Korea has faced since entering the free trade market after the foreign exchange crisis.”

According to multiple sources from the conglomerate industry on Thursday, Samsung Electronics Co. convened an emergency meeting led by Chief Financial Officer Park Soon-cheol.

The company discussed issues such as the diversification of supply chains, response measures from local governments, and status of component supply chains.

Samsung Electronics saw mixed reactions across its business divisions following the tariff announcement from the Trump administration.

It found some relief in the fact that Mexico, where its TV and home appliance production facilities are concentrated, was excluded from the additional tariffs, and that semiconductors were temporarily exempted.

However, Samsung Electronics was alarmed by the fact that Vietnam, a crucial hub in its global supply chain, was slapped with a 46 percent tariff.

Samsung Electronics operates factories in Bac Ninh and Thai Nguyen in northern Vietnam, with a combined monthly production capacity of 10 million smartphones and tablets.

Other Samsung subsidiaries, including Samsung Electro-Mechanics Co., Samsung Display Co., and Samsung SDI Co., also have production facilities in the area.

LG Electronics Inc. also called an emergency task force meeting to assess potential risks by the tariffs.

The company manufactures a significant portion of its home appliance supply for North America at its production base in Hải Phòng, Vietnam.

“We will flexibly adjust production locations based on manufacturing costs in each country,” said an LG Electronics official.

Although the automotive industry has escaped direct tariffs, a separate 25 percent tariff on imported cars and parts took effect as of 1 p.m. on Thursday, Korean time.

This poses a major challenge for Korea, where automobiles are the top export item to the U.S. and auto parts rank fourth.

Hyundai Motor Group plans to increase local production in the U.S. by over 500,000 units in the mid-to-long term. This would cover 60 to 70 percent of the company’s U.S. demand.

The challenge, however, remains whether the group can maintain exports of Korean-made vehicles and those produced at Kia Corp.’s Mexico plant.

South Korea’s battery trios – LG Energy Solution Ltd., Samsung SDI Co., and SK on Co., are investing heavily in large-scale battery production facilities in the U.S., allowing them to avoid immediate tariff impacts.

However, a major concern is that key battery materials and raw materials are primarily imported from Korea and other countries, which will lead to higher costs.

The four core battery materials – cathodes, anodes, separators, and electrolytes – account for 40 percent of battery costs.

Korea’s exports of these materials to North America amounted to about $1.9 billion in 2024.

“A decline in U.S. exports and rising local production costs are inevitable,” said an industry official. “We will expand local production in the U.S. while also seeking alternative markets, including the European Union.”

The refining industry anticipates limited direct impact since key exports like aviation fuel and petroleum products were excluded from the tariffs.

However, concerns remain about potential retaliatory measures from other countries and a broader increase in global trade barriers, which could ultimately slow global economic growth and reduce oil demand.

Steel products were excluded from the latest tariffs but the industry is still burdened by existing tariffs of 25 percent. Companies are working to reduce these tariffs through negotiations with the government.