【South Korea】Trump’s Tariff Crisis: How Should Korean Consumer Goods Companies Respond?

[Apparel News Reporter Park Sun-hee] On April 9, US President Trump announced that he would impose an additional tariff on Chinese-made products, raising the total to a high 125% tariff, while granting a 90-day deferral on reciprocal tariffs for other countries, imposing only a universal 10% tariff. During the grace period, each country is expected to focus all its efforts on negotiations with Trump, leaving room for the possibility of adjustments to the increase. However, it appears difficult to avoid the tariff increase itself.
Global brands and manufacturers have been given a little over three months of ‘adaptation period’ until mid-July, but a full review of supply chain and pricing strategies seems inevitable. The fashion and consumer goods industry, in particular, is under dual pressure from rapid production cost increases and long-term structural reorganization.
Some companies have already begun preemptively securing inventory, and there are also movements to redesign pricing policies before the tariffs are actually applied.
The Korean government has also launched a task force to respond to the trade dispute, but it does not seem easy to immediately suppress market volatility. Ultimately, each company’s own response strategy is expected to be the key to reducing the tariff shock.
Centric Software, based in Silicon Valley, USA, and leading the digital transformation of fashion and consumer goods, has sent a report presenting current market reactions, movements, and corporate-level solutions.
We disclose the contents organized around Centric Software’s AI/DT solution-based insights and Centric Market Intelligence (CMI) report, detailing how fashion brands and manufacturers should each respond and cooperate, and what specific action plans the overall Korean consumer goods industry should take.

– Tariff Structure and Deferral Schedule
This deferral measure is significant as it gives companies time to process existing contract volumes and reorganize their supply chain and logistics routes. However, since the tariffs themselves have not been withdrawn, accurate simulation and preparation of countermeasures are urgent.
– Between ‘Waiting’ and ‘Seizing the Initiative’
Until the new tariffs are actually imposed, most brands will likely maintain a wait-and-see attitude while depleting existing inventory. However, once the full tariffs are applied after the grace period, specific measures such as price increases or relocation to other production bases are likely to pour out all at once. How a brand responds initially will greatly impact brand trust and minimizing price shock.
– Who Will Bear the Tariff Burden?
Who will bear the increased production costs due to Trump’s tariffs is the brand’s most important decision. If the decision is to raise prices, a strategy to justify this is needed. Consumers want ‘value’ beyond a simple ‘cost pass-through’. The following strategies can be considered.
– Product Value Enhancement Strategy
If raising prices arbitrarily is difficult, an approach that enhances the product’s own value is effective.
– Inventory Depletion vs. Brand Image
Discount sales reduce inventory but, if excessive, weaken brand image. Strategic discounting is needed.
– Dynamic/Tiered Pricing Strategy
Introducing Dynamic Pricing or Tiered Pricing allows flexible price adjustments by season, demand, and customer type.

The tariff impact is direct for manufacturers. Especially for companies supporting global fashion brands through OEM/ODM, agility and flexibility are essential.

– Supply Chain Risk Diversification
It’s not just about moving production bases; the entire supply chain risk, including transportation, delivery times, and quality, must be considered comprehensively.
– Close Collaboration with Brands
Manufacturers must now move as supply chain partners with shared goals, based on transparent data, together with brands.
– Scenario Planning and Response Simulation
The key is to reduce decision-making time by pre-analyzing various scenarios such as “What is profitability if tariffs rise 15%?” or “How much delivery delay if production base is relocated?”

According to a recent Centric Software CMI (Centric Market Intelligence) report, brands that announce price increases in advance tend to minimize consumer churn. This is an even more critical issue for new and small-to-medium brands. Cases are increasing where brand trust actually rises by transparently and relatably explaining the reasons for price increases.

[Mass Retail/Mass Brands]
– Walmart is pressuring its suppliers to absorb the tariff increase themselves or demanding cost reductions. This acts as a significant burden on Chinese OEM/ODM companies and could also act as an indirect risk for Korean companies supplying through Chinese factories.
– Companies with low fixed margins and centered on mass production systems are expected to be hit harder.
[Luxury Brands]
– LVMH, Kering, Burberry, etc., may be able to absorb tariff costs thanks to their already high-margin structures, but it is reported that they are highly likely to pass them on to consumers through price increases.
– However, as demand elasticity has been slowing due to repeated price increases over the years, this is expected to act as a burden.
– Some luxury buyers are more likely to make purchases through duty-free shopping while traveling abroad, such as in Europe.
[Jewelry Industry]
– The gold price itself hit a record high of $3,139 per troy ounce as of April 2025 (a 19% increase year-on-year).
– With new tariffs also applied to raw gemstone imports, the high-end jewelry industry is facing a ‘perfect storm’ of price surges.
– Cartier, etc., have already implemented early price increases to defend profitability.
[Footwear Industry]
– Tariffs are also applied to products manufactured in Vietnam and Southeast Asian countries, which are centers of global footwear manufacturing, meaning Korean brands are within the scope of impact.

– Crocs, Adidas, Nike, etc., are still freezing prices, but UGG, Birkenstock, etc., have already implemented price increases.
– Unlike high-margin premium brands, small and medium-sized footwear brands are responding with stopgap measures such as workforce reductions and order suspensions.

Korean small and medium-sized consumer goods companies face the following structural risks:
– Small-scale production → Lack of unit price negotiation power
– Burden of fixed production and logistics costs → Difficulty passing on tariff costs
– Weak brand loyalty → Customer churn upon price increase
Some companies have temporarily suspended new orders or put hiring on hold, while some are giving advance notice of price increases via email or SNS.

In an uncertain market where tariff wars and high exchange rates persist, AI data-based insights must be used to turn crisis into opportunity. By understanding competitor trends and responding preemptively, meticulously reviewing cost scenarios to seek co-growth with partners, and executing in-season pricing and inventory strategies suggested by AI, flexible and agile operations become possible even in a more complex market.
[Centric Market Intelligence™: Preemptive Response with Real-Time Competitor Monitoring]
With the market environment changing rapidly due to tariff increase issues, missing competitor movements can shake an entire season’s strategy. The Centric Market Intelligence (CMI) solution is a tool that simplifies real-time competitor price monitoring and tracking of key SKU changes.
– Preemptive Grasp of Early Movements: Easily see at a glance through data which brand raised prices first, which product category promotions started.
– Immediate Decision-Making: Before tariff implementation, adjust your own pricing policy or promotion timing to get ahead in the speed race.
– Data-Based Strategy: Setting goals and scenarios based on real-time numbers, not vague guesses or hunts, reduces risk and maximizes opportunity.
[Centric PLM™: From Cost Scenarios to Partner Cost Management]
Meanwhile, Centric PLM helps simulate cost issues like tariff fluctuations or material cost increases across the entire supply chain and conduct cost negotiations with partners transparently.
– Cost Structure Scenarios: Run various virtual scenarios like changing production bases, material substitution, logistics route realignment to quickly find optimal solutions.
– Joint Decision-Making with Partners: Sharing data on one platform deepens ‘cost reduction’ collaboration with partners.
– Securing Margin and Price Competitiveness Simultaneously: Establish pricing strategies that do not miss both sales and profit margins based on appropriate costs.
[Centric Pricing & Inventory™: AI-Powered ‘Fine-Tuning’ of In-Season Pricing and Inventory]
Finally, the success of a season depends on timing and flexibility. The Centric Pricing & Inventory solution uses artificial intelligence (AI) to analyze sales trends and market data, proposing optimal prices in real-time.