**Diversifying Local Production and Export for ‘Pathway’**
Foreign visitors are experiencing various activities at the ‘2025 Korea Beauty Festival’ held at the Dongdaemun Design Plaza (DDP) in Seoul. [Yonhap]
[Herald Economy = Jeong Seok-jun, Reporter] The domestic major consumer goods industry breathed a sigh of relief at the resolution of the mutual tariff adjustment negotiations between South Korea and the United States, which dispelled uncertainties. However, as there are conditions more unfavorable than the existing Korea-U.S. Free Trade Agreement (FTA) framework, they are busy devising countermeasures.
The cosmetics industry, which has recently seen a significant increase in exports to the United States, is closely watching the post-negotiation developments. The export value of cosmetics to the U.S. increased by 17.7% ($150 million) in the first half of this year compared to the same period last year.
The cosmetics industry believes that the impact will not be as significant as that on traditional manufacturing industries like automobiles or steel. As the 15% tariff is applied to the cost, the price competitiveness of already inexpensive cosmetics is not expected to be significantly undermined. Additionally, since products from other countries entering the U.S. market are also subject to tariffs, the competitive conditions remain equal.
Amorepacific is analyzing whether cost burdens will increase and is maintaining close communication with local retail partners in the U.S. to stay competitive. LG Household & Health Care also mentioned, “There are still items that need to be adjusted in detail, so we are closely monitoring the situation.”
The food industry’s response was divided over whether to build a production base in the U.S. Companies like CJ CheilJedang and Nongshim have factories in the U.S. and produce their products locally, thus feeling little impact from the tariffs.
On the other hand, Samyang Foods exports products manufactured domestically. Until now, they have been exporting ramen to the U.S. duty-free, but a 10% tariff has been imposed since April, and a 15% tariff will be levied from September 1. Overseas sales account for about 80% of Samyang Foods’ total sales, with the Americas region making up 28% of their foreign sales last year.
Samyang Foods stated, “With the imposition of tariffs, increasing the supply price of some product items is inevitable.” Currently, Buldak Bokkeum Myeon is sold in the U.S. for about $1.5 per package.
The scale of direct exports by Korean fashion and apparel brands to the U.S. is not very large, similar to cosmetics. However, OEM companies producing in Southeast Asia and supplying to the U.S. are considering their future response.
Hansae Co., which manufactures clothing brands including Gap, has production bases in Vietnam, Indonesia, and Guatemala, and began operating a factory in El Salvador last year. The American textile factory Nexolene, acquired last September, also contributes to production. Sae-A Trading, with factories in Vietnam and Latin America, is reported to be considering diversifying production bases.
Large-scale offline retailers like hypermarkets see minimal impact from the tariff agreement, as they have virtually no exports to the U.S. through private brand (PB) products. Musinsa and CJ Olive Young, which have been selling K-fashion and K-beauty products to the U.S. in a reverse direct purchase format, are still in the process of identifying specific changes related to the tariffs.