South Korea’s ongoing political crisis, triggered by the martial law declaration and the opposition’s impeachment push against President Yoon Suk-yeol, has cast a shadow over the business sector. Major companies are now reevaluating their 2025 plans amid volatile exchange rates, financial market instability, and political uncertainty.
On Dec. 7, President Yoon’s impeachment motion failed to proceed after all but three ruling party lawmakers boycotted the vote, leading to its automatic dismissal. However, the opposition Democratic Party of Korea (DPK) intends to reintroduce the motion as early as Dec. 11. DPK floor leader Park Chan-dae announced their intention to pursue both impeachment and a special investigation, saying, “We will push forward every Saturday without fail.”
In response, South Korea’s largest conglomerates, including Samsung, SK, Hyundai Motor, and LG, are assessing how the political turmoil might affect operations and investments. An official from a major export-oriented company said the ongoing instability has forced management to reconsider its plans for next year, adding, “We were finalizing our 2025 strategy, but the current political climate has prompted us to rethink everything.”
Trade relations with the U.S. are becoming a growing concern, particularly after Donald Trump emerged as the leading Republican presidential candidate. Trump has promised to impose tariffs of 10-20% on imports, sparking fears that South Korean exports and U.S. operations could be negatively impacted. “If impeachment leads to a power vacuum, it’s hard to imagine the U.S. government prioritizing partnerships with South Korea,” said a representative from another export-driven conglomerate.
At the same time, companies like SK, Hyundai, and LG are closely monitoring potential changes to the Inflation Reduction Act (IRA) under a possible Trump administration. The IRA provides subsidies for U.S.-produced batteries and electric vehicles, prompting South Korean firms to invest heavily in U.S. production facilities. However, any revision or repeal of the law could undermine their investments.
The volatility of the Korean won has added another layer of complexity. The currency’s value against the U.S. dollar surged from the low 1,300 range in early September to 1,421 on Dec. 6. Prolonged political instability could erode confidence in the won, further driving up exchange rates. While exporters may benefit from a weaker currency, businesses reliant on imports are facing higher costs.
A Hanwha Group representative said the company is monitoring the situation but has not yet altered its plans. “A strong exchange rate benefits our defense exports, but it increases costs for our energy and chemical divisions,” the official noted.
South Korea’s business community has already adopted a more conservative approach to 2025 investments. A recent survey by the Federation of Korean Industries found that only 12.8% of the country’s top 500 companies plan to increase investments next year, a sharp decline of 16 percentage points from the previous year. Meanwhile, 28.2% of companies plan to cut back, an 18-point increase.
“Crisis management is now a central focus in our planning, given the volatile political environment,” said an official from a leading conglomerate. “We are prioritizing cautious decision-making over bold investments as we navigate these uncertainties.”
