"Reciprocal Tariffs" Invalidated... Korean Semiconductor and Home Appliance Industries Say "Uncertainty Has Grown" [Trump Tariffs Ruling]

Limited direct impact from reciprocal tariff withdrawal
But industry on edge over possible expansion of alternative tariffs
Industry: "We will respond while monitoring developments"

Tension is rising in the domestic semiconductor and home appliance industries following the U.S. Supreme Court ruling that reciprocal tariffs are illegal. While the immediate impact of the withdrawal of reciprocal tariffs is expected to be limited, there are growing expectations that the U.S. government will further strengthen alternative tariffs, such as product-specific tariffs, to make up for the invalidation of existing tariffs.

According to the relevant industries on the 21st, Korean semiconductor and home appliance companies are closely monitoring the situation in light of possible follow-up measures after the U.S. Supreme Court ruling that reciprocal tariffs are illegal.

The previous day (local time), the Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) does not grant U.S. President Donald Trump the authority to impose tariffs. With the Court ultimately invalidating the tariffs, the Trump administration must refund the tariffs it has collected since February last year.

However, within the industry there is growing speculation that the Trump administration will soon activate a "Plan B." Immediately after the ruling, President Trump announced that he would impose an additional 10% tariff on the entire world based on Section 122 of the Trade Act. He stressed that there are "stronger means, methods, regulations, and authorities than tariffs under the IEEPA." As alternative legal bases for tariff measures instead of IEEPA, President Trump cited Section 232 of the Trade Expansion Act, Sections 122, 201, and 301 of the Trade Act, and Section 338 of the Tariff Act.

For the domestic semiconductor and home appliance industries, which have been subject to product-specific tariffs, the immediate impact of the invalidation of reciprocal tariffs is not expected to be significant. As a result of this ruling, the 15% reciprocal tariff that had been uniformly applied to a wide range of Korean products will lose its legal basis, but product-specific tariffs imposed on automobiles, steel, and semiconductors under Section 232 of the Trade Expansion Act and other provisions will remain in place.

Kim Jeonghoe, Vice Chairman of the Korea Semiconductor Industry Association, said, "The legal basis for the tariffs that the U.S. Supreme Court invalidated this time is the IEEPA, which is related to reciprocal tariffs, not Section 232 of the Trade Expansion Act, which is related to Korea's semiconductors. Therefore, it seems difficult for this ruling to have a major immediate impact on the semiconductor industry," adding, "We will have to wait and see whether semiconductors are included in the global 10% tariff that will take effect in the near future, but the likelihood that semiconductor products will be included appears low."

However, if the Trump administration imposes alternative tariffs going forward, the domestic semiconductor and home appliance industries could also be affected. In the case of semiconductors, the White House has already announced a measure to impose a 25% tariff on semiconductors that are imported into the United States and then re-exported to a third country. The main targets of this measure are advanced non-memory chips for artificial intelligence (AI) and related equipment. The direct impact on general memory semiconductors, an area where Korea has a competitive edge, is limited, but there is also the possibility that the scope of application could be expanded if deemed necessary. In addition, "robots and industrial machinery," which fall under general machinery, have been under a Section 232 product-specific tariff investigation by the Department of Commerce since last September, leaving open the possibility of additional tariffs.

The industry is also maintaining a high level of vigilance. A semiconductor industry official said, "There is no impact yet because there are still no parts of semiconductors that are subject to tariffs," but added, "Fundamentally, the purpose of the Trump administration's tariff measures is to pressure companies to build semiconductor manufacturing facilities in the United States, so there could be various other attempts."

A home appliance industry official also said, "Product-specific tariffs on items such as steel and aluminum, which were not originally based on the IEEPA, remain valid, and uncertainty has increased as there are expectations that product-specific tariffs will be further strengthened to offset the invalidation of existing tariffs," adding, "We will monitor how the situation evolves and prepare the optimal response strategy."