The shifting political landscape in the United States has increased uncertainty for domestic companies engaged in business there, prompting major groups to urgently reassess their management strategies for the coming year. With ongoing tariffs and investment pressures from the Donald Trump administration and changes in congressional power dynamics following the midterm elections, there is a growing need to reevaluate global business plans centered on the U.S. market. Additionally, fluctuations in exchange rates and international oil prices, coupled with geopolitical risks in the Middle East and Europe, have further complicated corporate calculations.
According to industry sources on November 10, major domestic groups are reviewing the potential impacts of U.S. political and policy changes on their business operations for the next year ahead of year-end strategy meetings. The U.S. is a key market, accounting for over 20% of South Korea's exports, and is a region where leading companies in sectors such as semiconductors, automobiles, and batteries are making significant investments. Changes in U.S. policy could affect not only export competitiveness but also the operation of local production facilities and decisions on additional investments, making it crucial for companies to develop responsive strategies.
For companies that have already established large production bases in the U.S. or are planning expansions, the situation is particularly challenging. Hyundai Motor and Kia are working to expand production capacity at their Meta Plant in Georgia and existing local facilities, making adjustments to production strategies in response to tariff policies and changes in automobile demand essential. Battery manufacturers like LG Energy Solution and SK On must adjust their plant utilization rates and product lines to align with shifts in the electric vehicle market. Samsung Electronics (Texas) and SK Hynix (Indiana) face the critical task of securing profitability from their factory investments and stabilizing their operations.
The uncertainty stemming from U.S. policies, combined with volatility in exchange rates and oil prices, complicates the establishment of benchmarks for next year's business plans. In the Seoul foreign exchange market, the won-dollar exchange rate surged to 1,555.8 won on July 2, marking its highest level since March 5, 2009, during the global financial crisis. It then dropped to a yearly low of 1,323.1 won on October 26. This represents a fluctuation of 232.7 won, or 15%, in just over 100 days.
Exchange rates are a key variable that influences not only export price competitiveness but also the costs of raw material imports, profitability from overseas production and sales, and the burden of repaying foreign currency debts. This means that companies need to prepare multiple business plans based on exchange rate fluctuations and adjust the timing of their investments in response to market changes.
The widening fluctuations in oil prices are also seen as a major source of anxiety for the industry. The spot price of West Texas Intermediate (WTI) crude oil jumped from $56.01 per barrel on January 7 to $114.58 per barrel by April 7, more than doubling in just three months. Prices have remained above $100 per barrel since then, experiencing significant volatility.
The surge in international oil prices has led to increased fuel costs for the aviation and shipping industries, while the petrochemical sector may see profitability decline due to rising naphtha prices, a key raw material. Conversely, a sharp drop in oil prices could result in inventory valuation losses for refineries holding crude oil and petroleum products. With profitability varying across sectors depending on oil price trends, companies find it increasingly difficult to predict costs and operating profits for the coming year.
Geopolitical instability in the Middle East and Europe also complicates the formulation of next year's management strategies. Heightened military tensions in the Middle East could disrupt oil supply and maritime transportation, leading to simultaneous increases in energy prices and logistics costs. In Europe, the prolonged Russia-Ukraine war poses risks related to energy supply and delays in economic recovery. As a result, major groups are expected to emphasize supply chain diversification and strengthening emergency response systems in their business plans for the upcoming year.
* This article has been translated by AI.
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