Trump's steel tariffs to affect US production for Samsung, LG

Steel products are stacked at Pyeongtaek Port in Gyeonggi Province, Wednesday, when the U.S. government doubled tariffs on steel and aluminum imports to 50 percent. Yonhap

With the U.S. tariff hike on steel and aluminum to 50 percent now in effect, Samsung Electronics and LG Electronics are facing increased supply chain complexities in their U.S. home appliance manufacturing operations.

U.S. President Donald Trump signed an order doubling tariffs on steel and aluminum imports Tuesday. The levy came into effect the following day, affecting most products using metal as a component.

Since steelmaking generally has low operating profit margins, a sharp increase in tariffs is likely to lead to higher product prices.

The tariffs come as a concern for not only steelmakers here but also home appliance makers including the two Korean companies, as steel and aluminum are major component of their washers, dryers and other appliances.

In the wake of Trump’s latest tariff, the two companies have been exploring ways to increase their U.S. production by relocating parts of their manufacturing lines around the world.

Samsung Electronics' washing machine plant in Newberry, S.C. / Courtesy of Samsung Electronics

Since 2018, Samsung Electronics has been assembling home appliances at its plant in Newberry, South Carolina, capable of manufacturing 1 million washing machines annually. After the Trump administration floated various tariff measures earlier this year, Samsung Electronics has been reviewing a plan to shift part of its dryer production from its plant in Mexico to the Newberry plant.

LG Electronics has also been taking a similar approach. Since 2019, the company has operated its first U.S. home appliance plant in Clarksville, Tennessee, producing 1.2 million washing machines and 600,000 dryers annually. In response to Trump’s tariff policies, LG is now considering relocating its refrigerator production line from Mexico to the Clarksville plant.

LG Electronics CEO Cho Joo-wan has said during a shareholder meeting in March that “the company has already secured space at its Clarksville plant in the U.S. to enable the production of refrigerators, ovens and other home appliances,” and the company also “plans to expand its production in the U.S.”

LG Electronics' home appliance plant in Clarksville, Tenn. / Courtesy of LG Electronics

As the U.S. tariff on steel imports rose to 50 percent, the firms’ efforts to avoid tariff-related costs are expected to lose momentum, as the cost of sourcing raw materials is bound to increase.

The United States is a net importer for steel. According to a Jan. 27 report by the American Iron and Steel Institute, the U.S. imported a total of 28.86 million net tons of steel in 2024, accounting for over 30 percent of the country’s total steel shipments of 86.13 million tons.

Due to this structure, higher tariffs on steel imports are expected to trigger a price hike across steel products, fueling concerns that rising raw material costs will inevitably lead to higher product prices.

Adding more complexity is a possible undercutting. Analysts warn that steel products blocked from entering the U.S. market may be redirected to other regions, potentially triggering a sharp decline in global steel prices.

“Steel prices in the U.S. may rise in the short term, but will likely be adjusted in the second half of the year,” Meritz Securities analyst Jang Jae-hyeok said. "If steel products blocked from the U.S. market are sold in other areas and undercut prices, it could increase the downward pressure globally.”

In this case, it may be more advantageous for Samsung and LG to maintain their manufacturing at their global production bases even if they are subject to tariffs, thus forcing companies to carefully weigh which option has better profitability.

“Given the past precedents, it's hard to tell when the tariff policy might change again, so we’ll have to wait and see,” an industry official said.

“But based on the current situation alone, it’s clear that a new variable has emerged in the companies’ plans to redistribute production lines. Manufacturers will have to review how to readjust their supply chains.”