Will Korean corporations exit Mexico, Canada?

Then-Samsung Electronics Vice Chairman Lee Jae-yong, entrance row middle, inspects the corporate’s fridge manufacturing facility in Queretaro, Mexico, on this September 2022 picture. Courtesy of Samsung Electronics

Samsung, LG, Kia, POSCO and a number of different Korean corporations have been compelled to reassess prices for operating their factories in Mexico and Canada, as U.S. President Donald Trump reiterated his pledge of 25 percent tariffs on the 2 North American international locations.

Trump stated on Inauguration Day that his authorities has not ready for the common tariff plan, which goals to impose 10 to twenty % tariffs on all imports. Nonetheless, he threatened to start out levying hefty tariffs subsequent month on items from neighboring international locations, regardless of their trilateral free commerce pact with america.

Each Samsung and LG are reportedly contemplating decreasing the manufacturing of dwelling home equipment at their Mexican factories, whereas growing the output from their U.S. crops.

In response to trade officers, Samsung is pondering of manufacturing its laundry dryers within the U.S. state of South Carolina, as a substitute of the Mexican state of Queretaro. Samsung Electro-Mechanics has already delay its plan to construct an automotive digicam module manufacturing facility in Mexico.

LG Electronics is alleged to be contemplating relocating its fridge manufacturing line from the Mexican metropolis of Nuevo Leon to the U.S. state of Tennessee, which accommodates the corporate’s factories producing laundry machines and dryers.

“If the tariff hike is simply too fast, we will think about relocation of manufacturing bases and adjustment to capability,” LG Electronics Chief Monetary Officer Kim Chang-tae stated Thursday throughout a convention name on the corporate’s fourth-quarter earnings.

Nonetheless, some corporations are more likely to keep in Mexico for the decrease labor prices.

“Even when we pay tariffs, Mexico is inexpensive than the U.S. (when it comes to producing items),” LG Innotek CEO Moon Hyuk-soo advised reporters on the CES 2025 commerce present in Las Vegas, Jan. 8.

Carmakers seem to face larger difficulties relocating their factories, contemplating the massive measurement of their investments in comparison with dwelling home equipment producers.

Batteries and different element producers due to this fact can’t go away Mexico and Canada for some time.

“Our manufacturing facility ought to keep in Mexico, until Kia relocates its manufacturing facility there,” stated an official from POSCO Worldwide, the provider of traction motor cores for the carmaker’s electrical autos (EVs).

Kia stated on Friday that it’s contemplating delivery vehicles made in its Mexican manufacturing facility to Canada or different locations, if the tariff menace turns into a actuality.

Business officers additionally count on the carmaker to extend the output from its manufacturing facility within the U.S. state of Georgia.

Canada’s Minister of Innovation, Science and Business Francois-Philippe Champagne, fifth from proper, poses with executives of LG Vitality Answer (LGES) and Stellantis on the website for the 2 corporations‘ joint battery plant within the province of Ontario on this March 2022 picture. Courtesy of LGES

Stellantis, a U.S. carmaker that fashioned partnerships with LG Vitality Answer, Samsung SDI and POSCO Future M, not too long ago scrapped its plan to relocate a automobile manufacturing plant to mineral-rich Canada, exhibiting its dedication to Illinois and Detroit.

Nonetheless, a lot of the Korean battery companies have been decreasing their investments in Canada since earlier than Trump’s inauguration, because of the decelerating international demand for EVs.

Amid the looming menace of Trump’s tariffs, the federal government convened a gathering on Thursday with Korean corporations doing enterprise in Mexico to debate countermeasures towards the brand new U.S. administration’s commerce insurance policies concentrating on its neighbors.

Final month, Commerce Minister Cheong In-kyo held a gathering with corporations having Canadian operations, as a way to counteract the Trump tariff plan.