Why Did the US Impose a 25% Tariff on South Korea, Japan, and Malaysia?

All Three Countries Are Key to the US's Semiconductor Containment Strategy Against China
Malaysia's Role in Back-End Processing and the Semiconductor Supply Chain Is Increasing
"Tariff Pressure Aims to Pull Them Away from China"

President Trump has notified 14 countries, including South Korea, of reciprocal tariff rates and has postponed the grace period from July 9 to August 1. The countries included in this notification are Japan, South Korea, Malaysia, Kazakhstan, South Africa, Laos, Myanmar, Tunisia, Bosnia and Herzegovina, Indonesia, Bangladesh, Serbia, Cambodia, and Thailand (listed in the order of country-specific letters posted on Truth Social). South Korea will be subject to a 25% tariff rate, the same as announced in April, while Japan and Malaysia will face a 25% tariff rate, which is 1 percentage point higher than before. For the remaining countries, the tariff rates have either been lowered or frozen.

On July 8, KB Securities published a report titled "What the US Aims to Achieve by Sending Reciprocal Tariff Letters," analyzing that the latest reciprocal tariff letters are in fact targeting three countries?South Korea, Japan, and Malaysia?which play critical roles in the global semiconductor supply chain and are of significant geopolitical importance to the United States.

In the global semiconductor supply chain, South Korea is key in memory and foundry, Japan in materials, components, and equipment, and Malaysia in back-end processing. In Malaysia, the Penang region is so concentrated with major semiconductor manufacturing sites that it is called the "Silicon Island." Recently, global demand for AI semiconductor packaging has surged. Notably, as both US and Chinese companies expand their production facilities, Malaysia has maintained a neutral diplomatic stance, not leaning toward either the United States or China. Beyond semiconductors, Malaysia's presence in the rare earth supply chain is also growing.

Kim Ilhyuk, a strategist at KB Securities, stated that the reciprocal tariffs "are intended to keep South Korea and Japan, which are cooperating with the US restrictions on advanced semiconductor equipment exports to China, from getting closer to China, and to pressure them to increase their defense cost-sharing and defense spending." He also analyzed, "The US is likely using tariffs to threaten Malaysia in order to weaken China's semiconductor supply chain and strengthen the US supply chains for semiconductors and rare earths."

Among South Korea's $131.5 billion in exports to the US last year, the value of items subject to the reciprocal tariffs amounts to $47.3 billion. This figure excludes items such as automobiles and parts, steel, and aluminum, which are already subject to item-specific tariffs under Section 232 of the Trade Expansion Act and are therefore not included in the reciprocal tariff list, as well as items like semiconductors and equipment, pharmaceuticals, copper, and wood and forest products, for which the US is still considering item-specific tariffs.

For Japan, which exported $148.2 billion to the US last year, the value of items subject to reciprocal tariffs is relatively high at $72.4 billion. For Malaysia, which exported $52.5 billion to the US last year, the value of items subject to reciprocal tariffs is $25.6 billion.