25% Reciprocal Tariffs Directly Hit Exporters
Korea Holds No. 1 Market Share in the U.S. at 44.7%
The domestic food industry is on edge as the United States' tariff policy continues to fluctuate. The uncertainty is growing as President Donald Trump's reciprocal tariff measures oscillate between being 'invalid' and 'maintained.' With predictions that annual tariff burdens for food companies could exceed 100 billion won if high tariffs remain in place, the industry is closely monitoring the government's trade negotiation progress.
According to global agri-food trading platform Tridge and UN trade statistics (UN Comtrade) on May 30, South Korea's ramen exports to the United States last year amounted to 366.1 billion won (approximately $265.29 million), accounting for 44.75% of the entire U.S. instant noodle import market. This represents a 54.85% surge compared to the previous year. Analysts attribute this growth to increased brand awareness fueled by the popularity of K-content and the expansion of online distribution channels.
Currently, a basic tariff of 10% is imposed on Korean-made ramen exported to the United States. On May 28 (local time), the U.S. Court of International Trade issued a ruling invalidating President Donald Trump's reciprocal tariff measures, temporarily raising hopes within the industry. However, the situation reversed within a day when the Trump administration filed an emergency request to stay the ruling, which was accepted by the appellate court. As a result, the reciprocal tariffs can remain in effect until the appellate court issues its decision. This has heightened the likelihood that tariffs as high as 25% could be reinstated, increasing the burden on the domestic food industry.
According to Tridge's analysis, based on last year's export figures, the newly calculated tariff burden would be approximately 91.03 billion won (using an exchange rate of 1,372.56 won per dollar), which is about three times the current level. With exports continuing to rise this year, the actual tariff burden is likely to surpass 100 billion won. A food industry official stated, "Since the announcement of Trump's reciprocal tariffs, we have been forming task forces and considering various measures such as diversifying export destinations and reducing costs. Although the ongoing legal battle over the reciprocal tariffs is creating confusion, we will continue to closely monitor the situation and respond carefully according to each company's circumstances until a final decision is made."
Korea Ranks No. 1 in U.S. Imports... Reciprocal Tariffs Would Weaken Price Competitiveness
South Korea holds a dominant 44.7% share of the U.S. instant noodle import market, more than four times higher than Italy (11.38%), which ranks second. China (10.29%), Vietnam (8.72%), and Indonesia (7.49%) follow.
However, if high tariffs become a reality, exporters' price competitiveness will inevitably weaken. Korean ramen companies operating in the U.S. market include Nongshim, Samyang Foods, and Ottogi. Among these, Samyang Foods manufactures all of its products in Korea and exports them to the United States, so it is expected to bear the greatest tariff burden. Last year, Samyang Foods' overseas sales reached 1.3046 trillion won, with the U.S. market accounting for about 27% of that total.
Samyang Foods' flagship "Buldak Bokkeum Myeon" series is sold in the U.S. at prices ranging from $0.98 to $2.57 per 100g. Specifically, "Buldak Carbonara" (5-pack) sells for $6.88 (about 9,530 won), and the "Buldak 4-Flavor Mixed Set" (10-pack) sells for $18.59 (about 25,747 won). If tariffs are increased, local retail prices for these products will inevitably rise.
Nongshim produces its main product, "Shin Ramyun," at its U.S. factory, which allows it to minimize the impact of tariffs, as locally produced goods are not subject to tariffs. However, certain products are still exported directly from Korea and will be affected by tariffs. Currently, "Shin Ramyun" (10-pack) is sold in the U.S. for $5.12 (about 7,089 won), and "Chapaghetti" (5-pack) is sold for $3.63 (about 5,025 won).
Ottogi does not yet have a production facility in the United States, so its exports from Korea are subject to tariffs. Ottogi is currently constructing a local factory in California, scheduled for completion in 2027.
Benjamin Wilhelm Lathegan, an analyst at Tridge, stated, "The tariff risks that Korean ramen companies are currently facing in the U.S. market require not only short-term responses but also the establishment of mid- to long-term strategies." He added, "Companies should consider setting up local factories in countries with strong cost competitiveness to diversify production sites, and establishing systems for producing and packaging products within the U.S. would help both avoid tariffs and improve logistics efficiency."
He further emphasized, "Companies must also consider price strategies such as adjusting consumer prices or renegotiating supply terms with local distribution channels. It is crucial to design a structure that can maintain profitability while minimizing consumer resistance."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
