Samsung faces pricing dilemma in US amid Trump's 25% tariff plan
US President Donald Trump's latest announcement of a minimum 25 percent tariff on all smartphones manufactured overseas and imported into the US has sent ripples through the global tech sector, with Samsung Electronics bracing for potential fallout.
A 25 percent tariff could raise retail prices of Galaxy smartphones by 30 to 40 percent in the US, significantly undermining Samsung's ability to generate the usual post-launch momentum, according to industry sources on Wednesday.
Samsung produces about half of its smartphone volume in Vietnam. This includes a wide range of flagship devices — from the Galaxy S series and foldable Z Flip and Z Fold models to the more affordable Galaxy A series — many of which are exported directly to the US market.
While Trump argues that American companies can avoid tariffs by shifting production to the US, sources say such a move is far from feasible for Samsung. High labor costs and lower operational efficiency make large-scale manufacturing in the US economically unviable.
The most immediate concern is Samsung's upcoming foldable lineup, scheduled for launch in the second half of this year. If Trump's proposed tariffs are enforced, the Galaxy Fold series could face substantial import duties, directly affecting pricing strategies in North America — one of the world's most lucrative markets for premium smartphones.
Apple continues to dominate the US smartphone market, maintaining a market share of 50 to 60 percent each quarter. This sustained dominance poses a challenge for competitors such as Samsung, which already struggles to gain significant ground and finds it difficult to compete on price alone.
According to market research firm Counterpoint Research, Apple led the US smartphone market in the first quarter of this year with a 57.1 percent share, followed by Samsung at 26.5 percent. Motorola came in third with 4.2 percent.
The pressure is compounded by a stark profitability gap. Samsung's smartphone division posted an operating profit margin of 9.1 percent, far below Apple's robust 31 percent. This means the tariff shock would hit Samsung harder, limiting its capacity to absorb the added costs.
In a bid to protect its US market share, Samsung may consider offsetting the cost burden by slightly raising smartphone prices in other markets, including Korea.
'Samsung might avoid raising US prices too sharply to defend its market position and instead spread the cost across global markets,' said an industry source who requested anonymity. 'But that could trigger backlash from domestic consumers, who may question why they're being made to share the cost of a US-specific policy.'
As of now, Samsung has not made an official comment regarding its pricing strategy or contingency plans in response to the tariff announcement.
yeeun@heraldcorp.com
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