Samsung under pressure as US tariffs rattle South Korean economy
By AFP
April 10, 2025
Samsung, the world's second-largest phone maker, produces around half of its handsets in Vietnam - Copyright AFP Nhac NGUYEN
Nhac Nguyen with Hieun Shin in Seoul
Sipping tea on her break outside a Samsung Electronics factory in northern Vietnam, worker Nguyen Thi Mai said she had heard about US President Donald Trump’s tariffs, but hoped it would not affect business.
Samsung, the world’s second-largest phone maker, produces around half of its handsets in Vietnam, and Trump’s threat to impose a 46-percent tariff threat on the country sent shockwaves through the South Korean giant’s supply chains.
“We don’t understand much about macro issues,” 27-year-old Mai told AFP, adding that daily life inside the factory in Bac Ninh province was unaffected, despite global market whiplash from on-again-off-again US levies.
“Our work goes on normally,” agreed Le Van Binh, 30, adding that he hoped the Vietnamese government would be able to work out a deal.
“Our top leaders are arranging to negotiate with the United States. I hope they can be successful and things will be good for all of us.”
Samsung turned to Vietnam because labour costs are “about one-tenth of those in South Korea”, Kim Dae-jong, a professor at Sejong University, told AFP.
But US tariff threats — even after Trump abruptly paused them on Wednesday — are now shaking the logic that has underpinned decades of rapid growth and manufacturing investment in developing Asian economies, he said.
If Samsung “fully absorbs” the proposed tariff cost instead of shifting production elsewhere “approximately four trillion won ($2.7 billion) — or some 33 percent of its smartphone operating profit — would be directly exposed”, said Kim Dong-won, managing director at KB Securities.
Samsung has built up inventory, and this week forecast record results for the first quarter of 2025. And there is scope for negotiations between Hanoi and Washington, he said — but even so, it is concerning.
– ‘Reallocating production’ –
If Trump does follow through, Samsung and fellow South Korean giant LG, which has also invested heavily in Vietnamese factories, may have no choice but to shift their investments to the United States, said Kang In-soo, an economics professor at Sookmyung Women’s University.
“Despite the additional costs involved, this appears to be an inevitable decision to maintain or expand their presence in the strategically important US market,” he said.
For Samsung, high-end televisions are their key driver of revenue stateside, Yong Seok-woo, president and head of the visual display business at Samsung Electronics told reporters.
“Most of the TVs sold in North America are produced in Mexico,” said Yong, which dodged Trump’s latest round of tariff threats — potentially leaving Samsung in a better position than many rivals.
“We have 10 production sites worldwide,” Yong added.
“We plan to overcome these challenges by reallocating production based on tariff conditions.”
– Domestic base? –
The tariff threats appear to be aimed at securing additional foreign investment, but with the United States lacking a strong domestic base to produce the high-end chips that are the lifeblood of the global economy, many experts expect they will not last in the longer term.
Trump’s decision to pause the imposition of the levies sparked euphoria on global markets on Thursday — but he raised tariffs on China to 125 percent because of a “lack of respect”.
Apple, Samsung’s chief rival, produces the bulk of its iPhones in China.
Sky-high tariffs “could impose substantial costs on US-based semiconductor consumers”, said Kang of Sookmyung Women’s University, with the fear of price increases already sparking iPhone panic buying.
However, “it is expected that the tariffs will be adjusted downward once a sufficient level of investment is secured”, Kang added.
Samsung’s exposure underscores the broader vulnerability of export-driven Asian economies.
In 2024, net exports accounted for more than 90 percent of South Korea’s total economic growth.
The country has been particularly ill-prepared to face the economic headwinds, having been effectively leaderless since December, when impeached former president Yoon Suk Yeol declared martial law.
Officials are scrambling to contain the fallout: Acting leader Han Duck-soo spoke to Trump this week, with the trade minister also flying to Washington for emergency talks.
The government announced a battery of support measures for South Korea’s beleaguered car makers on Wednesday — hit by sector-specific 25 percent tariffs — but they need to do more to help the country’s export-focused conglomerates, experts said.
Seoul must “focus on a proactive response to US tariff measures and swiftly implement a supplementary budget to stave off a deeper economic downturn”, Kang said.
Taiwan exporters count the cost of Trump’s ‘ridiculous’ tariffs
By AFP
April 9, 2025
Taiwan President Lai Ching-te says he has no plans to retaliate in kind to Donald Trump's tariffs, as the island's companies scamble to work out how to deal with the US blitz - Copyright TAIWAN PRESIDENTIAL OFFICE/AFP Handout
Joy Chiang and Allison Jackson
Taiwanese exporters are crunching numbers and talking to American clients as they scramble to figure out how to respond to US President Donald Trump’s tariff blitz that threatens to derail their businesses.
While the final impact is not yet known, factory owners on the island are clear eyed on one thing: moving operations to the United States is easier said than done.
“Taiwan’s structure is what makes this industry viable,” the owner of a machine tool exporter told AFP on the condition of anonymity, highlighting the island’s network of small and medium-sized factories supplying his company.
“There are so many components, like gears, belts and others — the US doesn’t have these industries. Setting up a factory in the US would not be worth it,” he said, describing Trump’s policy as “ridiculous”.
From Wednesday, Taiwanese products shipped to the United States, including electronics, machinery components, auto parts and bicycles, will be hit with a hefty 32 percent levy.
It is part of Trump’s far-reaching global tariffs that have rocked world markets and sparked recession fears, as he seeks to reduce the US trade deficit and push companies to shift manufacturing to American soil.
Many in Taiwan were stunned by the size of the duty, after chipmaking titan Taiwan Semiconductor Manufacturing Co’s plan to invest an additional $100 billion in the United States raised hopes the island would be spared.
While chips have so far avoided tariffs, analysts have warned the critical sector could be impacted anyway as levies drive up the cost of iPhones, laptops and other technology, and reduce consumer demand.
– ‘Unsophisticated understanding’ –
Taiwanese companies have spent days calculating the impact on their operations and speaking to US clients about how to absorb the cost of the new tariff.
“They’ve been receiving a lot of calls or instructions,” said Kristy Hsu, director of the Taiwan ASEAN Studies Center at Chung-Hua Institution for Economic Research.
She told AFP that US customers have requested deliveries be postponed or prices lowered.
Companies were also trying to determine if their products contained at least 20 percent “American content”, which could partially shield them from Trump’s levy, she added.
During Trump’s first term in office, US tariffs against China prompted many Taiwanese companies operating there to relocate to Southeast Asia to avoid the tax.
This time, however, there are fewer places to hide.
Trump has slugged imports from Vietnam and Thailand with 46 percent and 36 percent tariffs, respectively, and there was uncertainty about whether duties could be cut or raised even higher.
“Right now, the only option for setting up factories overseas is the United States, but the cost of doing so is extremely high,” an official from an electronic industry group told AFP.
“This truly isn’t something that can be done easily,” she said, adding “we didn’t expect the US would come down this hard.”
Trump’s across-the-board tariffs revealed an “unsophisticated understanding” of how supply chains worked, said Ho Ming-yen, non-resident fellow of the Research Institute for Democracy, Society and Emerging Technology.
– Levy ‘impossible to absorb’ –
Even if companies shifted their factories to the United States, they would still be slugged with tariffs on imported components needed for their products, Ho said.
Ho expected most Taiwanese companies would likely take a “wait-and-see” approach and cut costs as they “wait for the calamities to end”.
Taiwan President Lai Ching-te said he had no plans for “retaliatory tariffs” against the United States, the island’s most important security partner.
The government has pledged US$2.7 billion to help affected industries, but that was a “drop in the ocean” for what was needed, said Jason Hsu, senior fellow at the Hudson Institute think-tank.
Hsu estimated tariffs would cost Taiwanese exporters US$15 billion-US$20 billion a year.
To secure any relief from Trump, Taiwan needed to come up with deals for the president, said Hsu, a former member of Taiwan’s legislature for the opposition Kuomintang party.
“Trump doesn’t care about allies and partnerships, he cares about how much business you can bring to the US,” Hsu said.
The machine tool exporter said the United States was a “very important market” for the company, accounting for 30-40 percent of its sales.
While the business would survive in the short term, the owner hoped Taiwan could strike a deal with Washignton.
“A four to five percent hike we can split (with our clients) and absorb,” he said.
“But 32 percent is impossible to absorb. Our profit margin isn’t that high.”
‘Curve ball’: Irish whiskey producers fret over US tariffs
By AFP
April 9, 2025
Whiskey distillers in Ireland and Northern Ireland are bracing for the impact of US tariffs - Copyright AFP Paul Faith
Peter MURPHY
For Tony Healy, an Irish whiskey producer in Dundalk, near the UK border with Northern Ireland, US tariffs of 20 percent on EU alcoholic drinks were a huge and unexpected “curve ball”.
“But it’s here now, so we have to deal with it,” the 62-year-old told AFP on the factory floor where his “Healy’s” family-name whiskey brand is made.
Aiming to tap into the large Irish-American diaspora, Healy’s Dundalk Bay Brewing Company began exporting to the United States five years ago and was “just breaking in”.
Now they are faced with working out how to shave the 20 percent tariff from the bottom line.
“It will make already tight margins even tighter,” he said.
And with the firm’s New York distributor putting things on hold “for a month or two to see what comes now”, the picture looks even more uncertain.
“We don’t know what’s going to happen next but if there’s panic, there’s going to be chaos,” he warned.
According to the Irish Whiskey Association (IWA), a trade body, the US market represents 40 percent of total exports.
– Bourbon –
The worst case scenario for Ireland’s whiskey producers remains Trump’s threatened 200-percent tariffs on wine, champagne and other alcoholic products from France and other European Union countries.
Trump threatened to impose the huge tariffs in retaliation against the bloc’s planned levies on US-produced whiskey.
But according to a document seen by AFP on Tuesday the EU will spare bourbon to shield European wine and spirits from reprisals.
“If 200 percent is applied, we’re no longer in business in the US, new markets will have to be found. Asia may be the next place for us,” Healy told AFP.
“We also have other customers in different parts of Europe. We’ll explore as much as possible there, It’s all about adapting,” he said.
Producers in the Republic of Ireland are looking enviously at distilleries across the border in the UK region of Northern Ireland where the tariff rate is just 10 percent.
“Where there’s a border, there can be trade that’s not terribly legal, jumping products from one side to the other to suit needs,” said Healy.
“So there’s a possibility you wind up in this smuggling type of environment which none of us want, that’s unhealthy for business,” he said.
A short distance away in Northern Ireland at the Killowen Distillery, owner Brendan Carty acknowledges the tariff differential between the two parts of the island of Ireland could provide a “slight competitive edge”.
“Just across the border they have been hit twice as badly as we have,” Carty told AFP at the tiny facility in the picturesque Mourne mountains not far from the Irish Sea.
– Biggest market –
Since 2018 the 38-year-old has been making award-winning single malt whiskies and planned to ramp up sales in the United States this year.
“That hasn’t gone to plan,” he said, with a wry smile.
Although the US market has been a main growth target, Carty said “with this new Trump economics” the tariffs were not a surprise.
“To act like we’re shocked would be untrue, to be honest the 10 percent is nowhere near as bad as we feared,” he said.
“Although we love working with our US partners there we also have great markets in the rest of the world, diversity is key,” he said.
IWA head Eoin O Cathain told AFP that the Irish whiskey market was worth about 420 million euros ($464 million) in 2024.
“It is by far and away our biggest market, where we make our most sales,” said O Cathain.
“This tariff imposition — the effects of which will be immediate — will seriously undermine exports to the key market,” he said.
“Where you have tariffs, tit for tat, going over and across the Atlantic, this is a situation that we ultimately want to avoid,” he said.
“Time is of the essence to find a resolution,” he added.
How tariffs in the EU work
By AFP
April 9, 2025
Cars at the storage tower at the Wolfsburg Volkswagen Plant in Germany on November 15, 2024 - Copyright AFP Brendan SMIALOWSKI
Luca MATTEUCCI
Customs duties, or tariffs, have become a political punching ball as the European Union prepares to respond to US President Donald Trump’s recent offensive.
But what exactly do we mean when we talk about tariffs? How does the EU policy work? Who pays them and what are they for?
Some answers:
– What are tariffs? –
Used by almost every country, tariffs are a tax on products imported from abroad.
They take many forms, the most common being a percentage of the economic value of the product — the “ad valorem” duty.
The EU, like other economies, also uses so-called “specific” tariffs, such as an amount set per kilogramme or per litre of any given product.
Globally in 2022, the average tariff was 3.6 percent, according to the CCI-Cepii database (Centre for Prospective Studies and International Information).
In other words, each product crosses a border at a price 3.6 percent higher than its cost domestically.
“This average figure hides very strong differences between countries and sectors,” Houssein Guimbard, a trade policies specialist at Cepii, told AFP.
– What are they for? –
The most immediate objective of these taxes is to give domestic producers a competitive advantage against foreign competition, said Guimbard.
Another goal, which is more the case in developing countries, is to supplement the government budget.
Some African or island countries, for example, finance more than 30 percent of their expenses this way, according to Guimbard.
Countries also use tariffs to maintain a positive trade balance and keep the amount of imports down by taxing them.
“It’s a bit like President Trump’s current logic,” Guimbard told AFP.
– Who decides them in the EU? –
As a consequence of the customs union, the 27 member states have a common customs tariff for imported goods.
They do not apply any internal customs duties. The common customs tariff rates are set by the EU Council, based on proposals from the European Commission (EC).
They vary depending on agreements negotiated with trade partners and according to the “economic sensitivity of the products,” the Commission says.
Typically, very low customs duties are applied to oil or liquefied gas “because consumers and companies need them, and the European Union does not necessarily produce them,” said Guimbard.
Conversely, agriculture is highly protected: 40 to 60 percent protection on beef or dairy products, including all rights and quotas, compared to an average protection of 2.2 percent in the EU in 2022, according to Guimbard.
Since 2023, the EC has planned a “graduated response if our companies were victims of a significant increase in customs duties,” Yann Ambach, head of the Tariff and Trade Policy Office at the Directorate General of French Customs, told AFP.
“It is within this framework that the countermeasures currently being considered by the EC would be implemented,” Ambach said.
– Who pays them? –
In the EU, as a general rule, the importer, rather than the exporter, pays the customs duties.
If they increase, the main question is whether companies pass on the additional costs to the consumer.
“One must consider how important the product is for consumers and whether companies can raise the price of this product without reducing their margins,” said Guimbard.
“The translation of the increase in customs duty also depends on the ability of companies to find alternative sources when importing, or alternative destinations when exporting.”
– Who collects them? –
The member states are responsible for collecting customs duties.
They “must have adequate control infrastructure to ensure that their administrations, especially their customs authorities, carry out their tasks in an appropriate manner”, according to the EC.
“The American measures and the subsequent European retaliatory measures correspond to an intensification of the missions of monitoring, verification, and control of imports and exports,” said Ambach.
– Where do they go? –
For the period 2021-2027, the member states retain 25 percent of the collected customs duties.
“This measure not only covers collection costs but also serves as an incentive to ensure a diligent collection of the amounts due,” the EC says.
The remaining 75 percent directly funds the EU budget. Tariffs on imported goods therefore account for approximately 14 percent of the community budget.
Volkswagen says first-quarter profits impacted by Trump tariffs
By AFP
April 9, 2025
Volkswagen says profits have already taken a hit from US tariffs on cars - Copyright AFP DANIEL DUARTE
German auto giant Volkswagen said Wednesday that tariffs on car imports into the United States ordered by President Donald Trump had dragged down its first quarter operating profit.
Europe’s largest auto manufacturer said its operating profit in the first three months of 2025 fell to 2.8 billion euros ($3.1 billion) from 4.6 billion euros in the same period last year.
The result “deviates significantly” from market expectations that operating profit would come in at around four billion euros, Volkswagen said in a statement.
The steep drop was due to one-off impacts which totalled 1.1 billion euros, the group said.
These included 600 million euros in provisions related to the European Union’s emissions targets for auto manufacturers and another 200 million euros to restructure Volkswagen’s struggling software unit.
In addition, Volkswagen said it felt a 300 million euro impact from adjustments in “provisions for the diesel issue” and a write down in the cost of “vehicles in transit in connection with the import duties introduced in the United States at the beginning of April”.
Trump last month announced a 25-percent tariff on autos imported to the United States, which is the number one destination for German car exports.
Volkswagen — a 10-brand group which also includes Audi, Porsche, Seat and Skoda — sold just over one million vehicles in North America last year, 12 percent of its sales by volume.
About 65 percent of the cars it sells under the Volkswagen brand are shipped into the United States. The figure rises to 100 percent for its high-end Audi and Porsche brands.
The hit to Volkswagen’s operating profit came despite the group’s sales revenue for the first quarter rising to 78 billion euros from 75.5 billion euros in 2024, an increase of three percent.
The Wolfsburg-based group kept its outlook for 2025, but noted that “announced increased import tariffs, particularly in the United States of America, are still not included in the forecast”.
The omission was down to the fact that “the effects and their interactions cannot be conclusively assessed at present”.
Volkswagen, which has struggled with foreign competition, said it currently expected sales revenue to increase five percent over the full year in 2025.
The auto group will publish its full results for the first quarter on March 31.
‘Catastrophe’: Volkswagen town rattled by Trump trade war
By AFP
April 9, 2025
The power plant at the headquarters of German carmaker Volkswagen in Wolfsburg - Copyright AFP Paul Faith
Raphaelle LOGEROT
The dour mood at Germany’s crisis-hit auto giant Volkswagen has given way to angst and fury as US President Donald Trump has escalated a trade war against friends and foes alike.
Veteran auto workers who spent decades at the plants of Germany’s storied industrial titan fear for the worst since Trump has ramped up a range of import tariffs, sparking global market turmoil.
“A catastrophe, terrible,” said retired VW autoworker Richard Arnold, 85, expressing a sentiment widely shared in Wolfsburg, where the carmaker is headquartered and which is dominated by the smoke stacks of its own power plant.
A veteran of Europe’s biggest car manufacturer, Arnold predicted that “America will suffer just as much with the price increases” sparked by Trump’s aggressive trade policies.
Volkswagen — which has been battered for years by high energy and labour costs as well as stiff competition from China, especially in electric vehicles — announced in December, after a bitter, months-long industrial dispute, that it would cut about 35,000 jobs by 2030.
Last week Trump, who has long railed against the sight of imported German cars on American streets, gave automakers in Europe’s biggest economy another headache when he slapped 25-percent tariffs on car imports.
The US president followed up with a baseline tariff of 10 percent on worldwide imports, and extra levies on dozens of countries exporting more to the United States than they buy.
The auto industry is a flagship sector in Europe’s biggest economy, and the United States was last year the top importer of the country’s cars, receiving about 13 percent of Germany’s shipments.
Volkswagen — a 10-brand group which also includes Audi and Porsche as well as Seat and Skoda — sold just over one million vehicles in North America last year, 12 percent of its sales by volume.
The company has so far been restrained in its response, with a Volkswagen spokesman telling AFP that the carmaker was assessing its options.
“We have our dealers’ and customers’ best interests at heart, and once we have quantified the impact on the business we will share our strategy with our dealers,” he said.
– ‘Nonsense, idiocy’ –
But another retired VW worker, Friedhelm Wolf, 70, was far more outspoken.
“Absolute nonsense … actually just idiocy,” he fumed. “The man in the White House doesn’t know what he’s doing.”
Now, Wolf said, it’s time “to wait and see” how the conflict pans out.
“Well, you can first try to negotiate,” he said. “And if that doesn’t help, you just have to raise the tariffs.
“The problem is, we don’t buy that many cars made in the USA.”
He pointed out that Volkswagen has long employed thousands of workers at plants in Tennessee and Puebla, Mexico.
“VW doesn’t just make Volkswagens here in Germany, they also manufacture in the USA. They also have a plant in the United States and one in Mexico,” said Wolf.
“Vehicles are imported from Mexico to the USA, and also parts that US vehicles need come from Mexico,” he added.
“So, it will definitely become more expensive for American consumers.”
Citing a Volkswagen memo to dealers in the United States, trade publication Automotive News has reported that the manufacturer planned to add an “import fee” to cars it ships into the country.
Volkswagen also indicated it would pause rail shipments of vehicles made in Mexico to the United States, Automotive News said, in a report not yet confirmed by the company.
Another 85-year-old VW veteran, who only gave his name as Nicky, voiced dark fears about the impact of it all on VW’s current workforce.
“Those who are still working don’t even know what’s going to come their way,” he told AFP.
He said the EU had proposed a zero-tariff regime with the United States, “but it’s not being accepted”.
This, Nicky said, could spark a transatlantic tit-for-tat battle “which will escalate things …. It’s a catastrophe at the moment.”
Thorsten Groeger of trade union IG Metall said that for VW’s auto production, “the proportion exported to the USA is relatively high, and Volkswagen employees share these concerns as well”.
He called on German politicians and auto companies to do whatever they can to ensure that the workers’ jobs stay safe.
“Trump’s policies must not be allowed to lead to German colleagues having to fear for their jobs.”
Strength in numbers: Latin America urges unity in face of Trump tariffs
By AFP
April 9, 2025
Donald Trump's tariffs on imports of non-US products -- some of them suspended and altered numerous times -- threaten economic disruption for Latin American and Caribbean economies - Copyright AFP Orlando SIERRA
Noe LEIVA
Brazilian President Luiz Inacio Lula da Silva on Wednesday lambasted “arbitrary” US import tariffs at a summit of Latin American leaders that urged a united front against Donald Trump’s economic measures.
Lula was among 11 heads of state gathered in Honduras for a meeting of the 33-member Community of Latin American and Caribbean States (CELAC).
It was also attended by China, which is seeking to replace the United States as the main political and economic influence in the region.
“Arbitrary tariffs destabilize the international economy and raise prices,” said Lula, the president of Latin America’s biggest economy.
“History teaches us that trade wars have no winners,” he added.
On April 5, US trading partners were slapped with a 10-percent “baseline” tariff which remains in effect despite Trump backing down Wednesday on a host of other, more onerous duties announced last week.
Trump’s tariffs — some of them suspended and altered numerous times — threaten economic disruption for CELAC economies.
Mexico is the United States’ biggest trading partner and source of much of its car imports, while Brazil is its second-biggest provider of steel.
Gathered in the Honduran capital Tegucigalpa, CELAC leaders said unity of purpose was needed in these economically uncertain times.
“We cannot continue walking separately when the world is reorganizing,” host President Xiomara Castro said.
“The United States is redrawing its economic map without asking which people are left behind,” she added.
Mexico’s Claudia Sheinbaum said these were “times of profound changes in global trade.”
“Today more than ever is a good time to recognize that Latin America and the Caribbean require unity and solidarity among their governments and peoples and to strengthen greater regional integration,” she told the summit.
For his part, Colombian President Gustavo Petro said CELAC members “should help each other… let’s not fall into the trap of solving problems alone.”
– Beijing conference –
While Washington is increasingly seen as a volatile associate, China has been making inroads in the region.
Two-thirds of Latin American countries have joined President Xi Jinping’s trillion-dollar Belt and Road infrastructure program, and China has surpassed the United States as the biggest trading partner of Brazil, Peru and Chile, among others.
In Honduras, a Chinese delegation led by Qu Yuhui, Beijing’s number two for Latin American Affairs, has been holding bilateral meetings with CELAC delegates since Monday — including envoys from Argentina, Brazil, Colombia, Chile, Mexico, Venezuela and Cuba.
Beijing also plans to host a China-CELAC ministerial conference on May 13, to be attended by Xi.
“China is set to increase its influence in Latin America; it is a gift from the United States,” Peruvian international relations analyst Francisco Belaunde told AFP.
“China wants to appear now as a reliable partner that is in favor of free trade, it wants to take advantage of the mess generated by Trump and the annoyance of all countries over these tariffs,” he added.
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