Could a 100% U.S. tariff on chips actually backfire, leading to higher prices for American consumers? That's the question South Korean President Lee Jae Myung is raising, downplaying recent proposals for hefty import duties on semiconductors.
President Lee, speaking on Wednesday, suggested that if Washington were to impose a significant tariff, such as a 100% duty, on imported chips, the most likely outcome would be an increase in prices for these essential components within the United States itself. This perspective comes in response to U.S. Commerce Secretary Howard Lutnick's statement that South Korean and Taiwanese chip manufacturers might face tariffs of up to 100% unless they commit to expanding their production facilities on American soil.
But here's where it gets interesting: President Lee pointed out the substantial market dominance held by South Korean and Taiwanese chipmakers, estimating their collective share at 80% to 90%. Given this near-monopoly, he argued, any imposed import duty would inevitably be passed on to U.S. consumers, making the tariffs a less effective tool for achieving their intended goals and potentially harming American businesses and individuals.
He also reassured that South Korea already has existing trade agreements with the U.S. that include safeguards. These provisions, he stated, are designed to ensure that South Korean chip producers are not placed at a disadvantage compared to their Taiwanese or other international competitors. This suggests a belief that the current framework already addresses competitive balance.
This discussion about tariffs comes at a time when South Korea's export performance has been exceptionally strong. In 2025, the nation achieved a record-breaking $709.4 billion in exports, marking a 3.8% increase from the previous year. A significant driver of this growth was the 22% surge in semiconductor shipments, fueled by robust demand for artificial intelligence investments. While chip exports to the U.S. represented 8% of the total $173.4 billion in semiconductor exports, China remained the largest market, followed by Taiwan and Vietnam.
And this is the part most people miss: Beyond the chip tariffs, President Lee also addressed the recent slump in the South Korean won. He expressed confidence that domestic authorities anticipate the currency strengthening to around the 1,400 won per dollar level within the next month or two. However, he cautioned that domestic policies alone might not be enough to fully stabilize foreign exchange markets, noting a correlation with the weakness of the Japanese yen. Despite this, he indicated that the won is performing relatively better in comparison.
On the diplomatic front, President Lee revealed his ongoing efforts to encourage dialogue between North Korea and the United States. He emphasized the need for a pragmatic approach to dealing with Pyongyang, especially given its continued nuclear arms development. He stated, "There is a benefit to making the North stop making nuclear materials and not export nukes and stop developing ICBMs." However, he also acknowledged the immense difficulty in envisioning North Korea voluntarily abandoning its nuclear weapons program.
North Korea has, to date, not responded positively to overtures from both President Lee and U.S. President Donald Trump for renewed dialogue. Talks have been stalled since the 2019 summit between Trump and North Korean leader Kim Jong Un, primarily due to disagreements over sanctions relief and nuclear dismantlement.
What do you think? Should the U.S. proceed with tariffs that could potentially increase prices for its own consumers, or are there better diplomatic and economic strategies to pursue? Share your thoughts in the comments below!
