Trump’s Tariff Threat Puts Samsung in a Bind Over Smartphone Pricing Strategy

Samsung Faces Dilemma as Trump Threatens Tariffs on Foreign Smartphones (Image supported by ChatGPT)

SEOUL, May 27 (Korea Bizwire) — A renewed push by  U.S. President Donald Trump to impose a sweeping 25% tariff on all foreign-made smartphones, including Samsung’s Galaxy lineup, is stirring deep concern at the South Korean tech giant.

The proposed tariffs, expected to take effect as early as next month, are part of Trump’s broader strategy to pressure companies like Apple and Samsung to manufacture devices domestically.

Trump, speaking at an executive order signing ceremony at the White House on May 23, signaled his intent to apply the tariffs not only to Apple iPhones made in China but also to Samsung’s devices assembled overseas. The measure is framed as a job-creation tool aimed at encouraging U.S.-based production by making imported products less cost-competitive.

For Samsung Electronics, the move presents a dilemma. Raising prices in the U.S. to offset the tariffs could erode its 21.3% market share, especially against Apple, which controls nearly 60% of the American smartphone market, according to market research firm Omdia. Yet absorbing the cost without adjustments could eat into already-thin margins.

The impact could extend beyond U.S. borders. Analysts suggest that to cushion the blow, Samsung may modestly raise prices in other regions — including South Korea — to avoid a drastic hike in the U.S. alone.

However, this poses a domestic political and market risk: rising discontent among Korean consumers and increasing competition from Chinese rivals like Xiaomi, which officially entered the Korean market this year.

“Consumers in Korea will inevitably question why they’re being asked to pay more due to American tariffs,” said one industry insider, adding that public backlash at home could become a headache for Samsung.

Samsung Galaxy S25 series (Image courtesy of Yonhap)

Apple faces a similarly complex challenge. The company currently manufactures about 90% of its iPhones in China, and analysts estimate that relocating just 10% of its supply chain to the U.S. would require over $30 billion and at least three years. Even with partial production in India, price hikes of 40–60% on U.S. models are anticipated.

Samsung, meanwhile, has ruled out U.S. production for its smartphones, citing high labor costs and operational complexities. Without a domestic production pivot, price increases in the U.S. market appear inevitable — potentially as much as 30–40% per device.

The timing also complicates the launch of Samsung’s next-generation foldable smartphones, the Galaxy Z Flip7 and Fold7, slated for release this July. Higher prices could dampen demand just as the company hopes to close the gap with Apple.

The landscape is further complicated by Xiaomi’s rapid local expansion, which has included setting up a Korean subsidiary and launching a dedicated online store. With streamlined logistics, the Chinese brand has slashed its product rollout time in Korea, positioning itself as a competitive low-cost alternative.

In the face of political tariffs and an intensifying global price war, Samsung now finds itself walking a tightrope between protecting its U.S. market position and maintaining domestic goodwill — all while fending off aggressive newcomers.

Kevin Lee (kevinlee@koreabizwire.com)