By Jihoon Lee and Heekyong Yang

SEOUL (Reuters) – South Korea's trade minister stated on Wednesday that domestic companies might increase their investments in the United States if the next U.S. administration raises tariffs.

These comments came shortly after Republican Donald Trump's victory in the 2024 presidential election.

> "If tariffs get raised, the first alternative firms can consider will be raising direct investment and on-site production," Trade Minister Cheong In-kyo said in an interview with Reuters.

Cheong noted ongoing investments and the potential for increased U.S.-bound exports, particularly from small and medium-sized parts manufacturers. He highlighted that South Korean companies have significantly invested in the U.S. automobile sector, especially electric vehicles.

Trump has proposed imposing blanket tariffs of 10% to 20% on all U.S. imports, which a South Korean state-run think tank estimated could result in a loss of up to $44.8 billion in exports for the trade-dependent economy.

In 2022, South Korean investment in the U.S. reached $27 billion, making up about 44% of total overseas investments by Korean firms, the highest share since 1998, according to the Korea Trade Investment Association.

Cheong mentioned that the trade ministry is prepared for various scenarios and intends to consult with the incoming administration once dialogue channels are established.

> "Still, relations between South Korea and the United States will not be greatly affected even if the current situation remains unchanged," Cheong stated. He emphasized efforts to maintain smooth trade not just with the U.S., but also with China, which he labeled as "the most important" market.

South Korea's export growth weakened in October, reaching a seven-month low and falling short of market expectations. In October, shipments to the United States grew by only 3.4%, the slowest rate since August 2023, while exports to China surged by 10.9% to a 25-month high in terms of value.

Cheong is optimistic that this year's exports will surpass last year's figures and he vowed to implement measures to address uncertainties affecting next year's trade conditions, including political events.

In 2023, South Korea's trade surplus with the United States reached a record $44.4 billion, the highest surplus with any country, with cars making up nearly 30% of total U.S.-bound shipments.

Shares of prominent South Korean battery and automotive manufacturers, including Hyundai Motor and LG Energy Solution, saw declines on Wednesday, with analysts linking this to concerns over potential tariffs.