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Trump’s ‘Thank You’ tweet shakes up Samsung

Posted February. 04, 2017 07:10,   

Updated February. 04, 2017 07:25

한국어
Samsung Electronics has been manufacturing its home appliances such as washers, refrigerators, TVs for the U.S. market in Queretaro and Tijuana of Mexico due to benefits from cheap logistics costs and tariff-free NAFTA trade.

However, U.S. President Donald Trump said he would impose a big border tax of 20 percent on imports from Mexico and this has put Samsung on alert. “Trade tariffs between countries remained low by one-digit. Thus, a 20% tax is truly shocking,” an industry insider said.

Of course, it is not easy to relocate a manufacturing base to China and other Asian countries. The U.S. International Trade Commission (ITC) ruled last month that Samsung Electronics and LG Electronics violated international trade laws by dumping washers manufactured in China into the U.S. affecting U.S. companies including Whirlpool. Considering that such U.S. trade protectionism is increasing day after day, the Korean electronics giants has to bite the bullet and build factories to produce its products in the U.S. despite losses.

A senior level manager of Samsung said that the company is reviewing options to first produce washers, the most problematic issue, in the U.S. It has been said that Samsung considers to build additional factories of high-end appliance maker Dacor located in Los Angeles that the company acquired last year. However, such plan is still at the internal review stage as complex issues are remained such as land purchase and negotiations with the state government.

Samsung by directly commenting its name, LG Electronics and other Korean electronics companies got busy as well. LG Electronics announced that it would review the validity to establish a manufacturing facility for its home appliances and decide the decision by the first half of this year. About 30 percent of its home appliances are sold in the U.S. However, no one knows if Trump will wait by the first half of this year as the company has offered.

In the meantime, some within the industrial world complained that Korean major companies are sandwiched between President Trump and the Korean government. They say they do not know what to do as the government is not prepared to have a proper strategy for negotiations with the U.S. due to the presidential impeachment issue, amid growing pressure of the U.S.

"The government might want to reveal large companies' investment plans in the U.S. as key negotiation cards for future," said an executive of a major company, who declined to be identified. “People say the government delivered a message to several companies not to announce their U.S. investment plans individually.”



Dong-Il Seo dong@donga.com · Hyong-gwon Pu bookum90@donga.com