South Korea’s exports have declined 2.4% year-on-year in the first 20 days of May, partly due to weak sales to the US after Washington imposed and then partly lifted sweeping tariffs. According to data from the Korea Customs Service, exports totaled $32 billion from May 1 to 20, down from the same period last year. Shipments to the United States, a key ally, fell 14.6% year-on-year during the period, while exports to China and the European Union also declined by 7.2% and 2.7%, respectively.
The decline in exports is attributed to rising trade tensions, particularly in industries such as automobiles, which have been hit by a 25% levy. However, shipments of semiconductors, South Korea’s biggest export, rose 17.3% year-on-year. Experts suggest that the rise in chip exports could be due to stockpiling.
The South Korean government has announced plans to deploy an additional 28.6 trillion won ($20.5 billion) in emergency liquidity and financial aid to support domestic firms impacted by US tariff measures. “The government is taking a preemptive approach to the impact of tariffs by formulating an all-ministry export strategy,” the finance ministry said in a statement. It will also “work to fundamentally strengthen the ecosystem of high-tech industries such as semiconductors, AI, and secondary batteries.”
South Korea’s imports also fell 2.5% year-on-year to $32.2 billion in the first 20 days of May, resulting in a trade deficit of $300 million. The government is working to secure full tariff exemptions by finalizing a trade package with the US by early July.
In a bid to mitigate the impact of US tariffs, South Korea is attempting to disguise foreign products from China to avoid tariffs, as seen in cases where companies try to re-label goods. The potential long-term impact of US tariffs on South Korean exports is significant, with estimates suggesting a possible decline of $44.8 billion in exports if tariffs are implemented.