Work Scene Inside Samsung Electronics’ Querétaro Plant in Mexico (Image courtesy of Samsung Electronics)
SEOUL, July 8 (Korea Bizwire) — The mounting cost burden of U.S. tariff policies under the Trump administration is beginning to show in the earnings of South Korea’s top electronics manufacturers, with Samsung Electronics and LG Electronics both reporting sharp profit declines in the second quarter.
The impact stems from a series of U.S. tariff measures, including a 25% duty on steel and aluminum imports enacted in March, a blanket 10% universal tariff in April, and most recently, a steep 50% levy on steel-derived materials used in consumer electronics — such as those found in refrigerators, dryers, and washing machines — introduced in June.
Samsung Electronics on Monday posted a preliminary Q2 operating profit of 4.6 trillion won ($3.3 billion), marking a 55.9% drop from a year earlier and falling well below market expectations.
While divisional results were not disclosed, analysts point to continued weakness in both its semiconductor unit and its Device Experience (DX) division — which includes home appliances and TVs.
“The underperformance in the DX division, particularly in home appliances, is closely linked to rising tariff-related costs,” said Park Yu-ak, an analyst at Samsung Securities.
Trump Tariffs Begin to Squeeze South Korean Electronics Giants (Image supported by ChatGPT)
LG Electronics also saw a steep drop in second-quarter profits, reporting an operating income of 639.1 billion won, down 46.6% from the previous year and nearly halved from the previous quarter. The company cited heightened competition and escalating tariff costs as major headwinds, particularly in its core appliance and TV businesses.
“Tariffs imposed in June on steel-derived products likely dealt a blow to profitability,” said Hwang Ji-hyun, a researcher at NH Investment & Securities. However, she noted that the precise financial impact remains unclear.
Home appliance production is particularly vulnerable, as these products rely heavily on steel. Though both Samsung and LG operate manufacturing facilities in the U.S., local output is largely limited to certain models like washing machines.
LG Electronics Tennessee Lighthouse Factory (Image courtesy of LG Electronics)
Most other appliances are exported from Korea, Mexico, or Vietnam — leaving them subject to the full weight of U.S. duties unless made with American steel.
Worryingly, further tariff escalation looms. President Donald Trump on Sunday formally notified 14 countries, including South Korea and Japan, of retaliatory tariffs ranging from 25% to 40%, set to take effect August 1. South Korea’s designated rate is 25%.
“The broader concern is that second-quarter results may only represent the beginning,” said Park Hyung-woo, a researcher at SK Securities. “With reciprocal tariffs and potential follow-up duties looming, the cost pressure is expected to intensify further in the second half.”
South Korean firms are now urgently exploring supply chain shifts and production base restructuring to mitigate risks, but the industry faces growing uncertainty in the months ahead.
Kevin Lee (kevinlee@koreabizwire.com)
