Lee Warns: U.S. Chip Tariffs Could Spike Domestic Prices Amid Korean Monopoly

South Korean President Lee has cautioned that implementing a 100% tariff on semiconductor imports would likely result in sharply elevated chip prices for American consumers rather than achieving protectionist goals. With U.S. Commerce Secretary Howard Lutnick suggesting that South Korean and Taiwanese chipmakers may face such duties unless they expand production domestically, Lee’s position reflects Seoul’s confidence in its market position and trade protections.

Seoul’s Strategic Response to 100% Import Duty Proposal

Speaking at a recent news conference, Lee pointed out that Korean and Taiwanese manufacturers collectively control 80 to 90 percent of the global chip market. This dominance means most tariff costs would inevitably be transferred to U.S. consumers rather than deterring foreign production. The president emphasized that South Korea already maintains trade safeguards with the United States designed to prevent its chipmakers from facing competitive disadvantages relative to Taiwanese or other international rivals.

Lee’s argument underscores a fundamental market reality: extreme tariffs on concentrated supply chains create pricing pressures rather than domestic manufacturing incentives. Given the chipmaking industry’s technical complexity and capital requirements, competitors cannot quickly relocate production to meet new tariff regimes.

South Korea’s Record Export Performance Facing New Pressure

The country achieved notable export milestones entering 2026, with total shipments reaching $709.4 billion in 2025, representing 3.8% growth year-over-year. Semiconductor exports proved particularly robust, surging 22% as global demand for artificial intelligence applications remained strong. Among semiconductor destinations, American buyers accounted for approximately 8% of South Korea’s $173.4 billion total chip exports, while China maintained its position as the largest market, followed by Taiwan and Vietnam.

These figures demonstrate why Seoul views potential tariff escalation with concern. The semiconductor sector represents a critical pillar of Korea’s export economy, and U.S. import restrictions could significantly disrupt supply chains that both nations depend upon.

Won Weakness and Diplomatic Challenges on Lee’s Agenda

Beyond trade dynamics, Lee addressed the weakening Korean won, noting that South Korean authorities anticipate the currency strengthening toward the 1,400 per dollar level within the coming weeks. However, he acknowledged that domestic policy adjustments alone cannot stabilize foreign exchange markets, particularly given correlations with Japanese yen weakness. The won’s relative resilience compared to the yen provided some reassurance, though broader macroeconomic pressures persist.

On the diplomatic front, Lee indicated that Seoul is pursuing efforts to facilitate resumed dialogue between North Korea and the United States. He advocated for pragmatic engagement with Pyongyang, emphasizing potential benefits in halting nuclear materials production, preventing weapons exports, and stopping intercontinental ballistic missile development. The president conceded that persuading North Korea to abandon its nuclear program entirely remains unrealistic given current geopolitical circumstances.

North Korea has thus far rejected overtures from both Lee and U.S. President Donald Trump aimed at restarting negotiations. Dialogue stalled following Trump’s 2019 summit with Kim Jong Un, with disagreements persisting over sanctions relief and denuclearization terms.