South Korean companies’ key production bases in Mexico and Canada will face a 25% tariff on exports to the U.S. starting Feb. 4, as U.S. President Donald Trump’s tariff pledge took effect on Feb. 1. In response, companies that had prepared for this shift are now executing their Plan B strategies, including adjusting production volumes in Mexico and seeking alternative export routes. Some companies, such as Samsung Electronics, have reportedly reduced production at their Mexican plants to minimize inventory levels.
The immediate challenge is the steep tariff burden. “Starting on Feb. 4, producers and distributors moving goods from Mexico into the U.S. will have to bear the 25% tariff,” a manufacturing industry official explained. “While this won’t immediately lead to higher consumer prices, it has become a key factor in pricing and margin negotiations.”
Many South Korean companies had prepared in advance by ramping up production at their Mexican factories and shipping large volumes to the U.S. before the tariff took effect. A business insider familiar with the local situation noted, “Samsung and other electronics manufacturers in Mexico have been operating at reduced capacity since January to avoid stockpiling inventory.”
Companies are now making swift adjustments to their production strategies. Samsung is expanding U.S. production at its South Carolina plant, which currently manufactures washing machines, to include dryers. For products like TVs and refrigerators, the company is considering shifting exports from Mexico to Hungary and Vietnam. LG Electronics is also reviewing plans to scale down its Mexican operations, focusing solely on serving the Latin American market. Its U.S.-bound exports will instead be handled through tariff-free production in Changwon, a southern port city in South Korea, or in Vietnam.
Automaker Kia is increasing U.S. production while looking to redirect its Mexican output to Canada and other markets. An executive at a Mexico-based auto parts company noted, “With a 25% tariff in place, producing in Korea and exporting directly to the U.S. may be cheaper than producing in Mexico, so we’re considering direct shipments.”
POSCO, which manufactures automotive and appliance steel sheets in Mexico, said, “Most of our supply goes to local Mexican automakers, so the immediate impact is limited. However, if our Mexican clients struggle with U.S. exports, we’ll inevitably feel the ripple effects.” If high tariffs persist, companies are weighing whether to invest in U.S. production facilities, where labor costs are high and productivity is lower. A business source noted, “Once a factory is established in the U.S., reversing the decision is difficult. Companies are carefully monitoring the situation, keeping potential policy changes in mind.”
