Trump’s Steel Tariff Policy Positions K-POP Industry as a “Safe Asset”

As U.S. President Donald Trump imposed a 25% tariff on foreign steel in early February, the stock prices of South Korea’s four major entertainment groups reached their highest levels in 52 weeks. Analysts suggest that domestic investors are viewing the K-POP industry as a safe asset amid concerns over U.S. trade wars. According to the Korea Exchange, on Tuesday, February 11, JYP Entertainment and HYBE’s stock prices rose by 6.09% and 3.15%, respectively, hitting new 52-week highs. JYP closed at 83,600 won ($57.5), while HYBE closed at 245,500 won. SM Entertainment approached its 52-week high, closing at 95,000 won, and YG Entertainment also finished higher, rising 2.09% to 53,800 won. Ji In-hae, a researcher at Shinhan Investment & Securities, analyzed that “the entertainment sector will benefit significantly from the return of key intellectual properties such as BTS and BLACKPINK, along with minimal impact from U.S. tariffs.” The reason for investors’ focus on the K-POP industry is clear. Tariffs primarily affect the import and export of goods like steel, semiconductors, and automobiles, but industries driven by “soft power” such as entertainment are generally unaffected—steel is not required to form K-POP groups. Given South Korea’s heavy reliance on export-oriented products like semiconductors and automobiles, which face significant impacts, K-POP is considered relatively protected among many vulnerable industries. Institutional investors have been actively buying shares. Since the beginning of this year, they have purchased a total of 72.1 billion won worth of HYBE shares, 32.8 billion won worth of SM Entertainment shares, 29.4 billion won worth of JYP Entertainment shares, and 2.1 billion won worth of YG Entertainment shares. Expectations regarding the strong resilience of the K-POP industry also play a role. This contrasts with the 52-week lows seen earlier in the year due to BTS members’ military service starting in late 2024 and contract-related controversies involving BLACKPINK. BTS is set to resume full-group activities starting in June, and BLACKPINK will begin its world tour in the second half of this year. The future growth prospects for the K-POP industry are also bright. According to the Korea Institute for Cultural Tourism, K-POP generated approximately $900 million (about 126 billion won) in revenue in 2023, a figure that represents more than a third increase from the previous year. Renewed efforts at cultural exchange with China are also acting as positive signals. With China implementing visa-free policies for South Korean visitors, there are expectations of increased opportunities for concerts and music sales.