Trump South Korea Tariffs could trigger ‘retaliation’ warns analyst

Further to the news that Trump is raising US tariffs on South Korea imports to 25%, expert comment from Daniela Hathorn of Capital.com.

Daniela Hathorn, Senior Market Analyst, Capital.com said:

“South Korea sits at the heart of the global tech supply chain, particularly in semiconductors, displays and memory. Companies like Samsung are critical suppliers of  advanced components used across smartphones, data centres, AI infrastructure and consumer electronics. A tariff of this magnitude raises costs either directly (through imports into the US) or indirectly, as supply chains adjust. Even if exemptions or workarounds emerge later, the headline alone reintroduces uncertainty around input costs and margins for global tech firms.

This also has implications for the AI and capex-heavy tech trade. The market has been comfortable with the idea that AI build-out can continue largely uninterrupted, but tariffs on a key supplier nation challenge that assumption. This doesn’t derail the AI narrative, but it complicates it at a time when valuations are stretched.

The move also reinforces the idea that trade policy risk is no longer confined to China. Extending tariff pressure to allies like South Korea widens the scope of trade risk and increases the chance of retaliation or fragmentation. That raises the risk premium for globally integrated sectors like technology, which rely on just-in-time supply chains and cross-border specialisation.

Finally, there’s a behavioural angle. Much like with the “TACO” trade, markets may initially assume this is a negotiating tactic rather than a permanent policy shift, limiting the downside reaction. However, repeated use of tariff threats, even if later softened, still chips away at confidence and encourages firms to price in higher structural costs over time.”