How Trump's potential tariffs on cars, semiconductors may affect South Korea

Concerns also grow as cars and semiconductor chips could be next on Trump's tariff list.

Here's our Bae Eun-ji on how this may affect local companies.

Starting March 12th, the United States will be imposing 25 percent tariffs on steel and aluminum imports and this is set to affect many countries, including South Korea.

Announcing this, U.S. President Donald Trump said that he's also looking at tariffs on cars and semiconductor chips to create jobs.

"But we'll be talking about other subjects like cars. We'll be talking about drugs and pharmaceuticals. We'll be discussing chips. And we're going to be doing some other things in addition to that, all of which will bring in a lot of jobs into our country. Cars is going to be a very big one and a very important one."

Trump's comments have raised more concerns in South Korea, as cars and semiconductors take up more than 30 percent of the country's total exports to the United States.

S&P Global Ratings said in a report released in November, that a potential 20-percent tariff on imports from South Korea could cut Hyundai and Kia's earnings by up to 19 percent.

As for chips, experts say that the potential tariff hikes on chips are not likely to have a significant impact on Korean companies for the time being.

"As for memory chips, there's not really a product in the market that can replace South Korean chips. So considering the time until the tariffs start to have an impact for example, the time needed for South Korea to build a semiconductor factory in the U.S. I don't think it will have that much of an impact in the semiconductor industry for now."

But pundits warn the message that Trump is trying to say is clear: to pressure foreign companies.

"Using tariffs, they're trying to pressure South Korean companies to make it more beneficial to the United States, when those companies invest in the U.S."

To avoid tariff risks, industry watchers say that it's now more important than ever for Korean semiconductor manufacturers such as Samsung and SK hynix to secure deals with big tech companies in the U.S.

Bae Eun-ji, Arirang News.