South Korea exports rise at fastest in 7 months before higher US tariffs kick in

[SEOUL] South Korea‘s exports rose for the second straight month in July, beating market expectations on strong chip demand and shipments being moved forward ahead of higher US tariffs, which are expected to weigh in the second half of the year.

Exports from Asia’s fourth-largest economy, an early bellwether for global trade, rose 5.9 per cent from the same month last year to US$60.82 billion, trade data showed on Friday, higher than the 4.3 per cent increase in June and the strongest since December 2024.

The figure beat a median 4.6 per cent rise forecast for July in a Reuters poll of economists, who also noted signs of front-loading shipments ahead of an Aug 1 deadline for higher US tariffs.

President Donald Trump signed an executive order on Thursday imposing reciprocal tariffs ranging from 10 per cent to 41 per cent on US imports from dozens of countries and foreign locations.

With South Korea, Trump announced a trade deal on Wednesday setting tariffs at 15 per cent, lower than a threatened 25 per cent but higher than the current 10 per cent, which officials, companies and economists cheered for reducing uncertainty over the trade environment.

“Despite the trade deal, demand is still expected to weaken from August as overall tariff rates will increase,” said Lee Jeong Hoon, an economist at Eugene Investment Securities.

“Demand for artificial intelligence, however, will continue to be strong, while that for automobiles is growing in non-US markets.”

A separate business survey showed on Friday South Korea‘s factory activity contracted for the sixth straight month in July, as uncertainty over US tariffs weighed on output and orders.

The trade-reliant economy grew at the fastest pace in more than a year in the second quarter, buoyed by rebounding consumer spending and a surge in exports driven by demand for technology.

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Exports of semiconductors jumped 39.3 per cent in July, the biggest annual increase since October 2024, while cars rose by a five-month high of 8.8 per cent on robust demand in non-US markets such as Europe. Ship exports surged 107.6 per cent.

By destination, shipments to the US rose 1.4 per cent, after three straight months of declines, as growing technology demand offset the impact of Trump’s tariffs on steel and auto parts.

Exports to China fell 3.0 per cent, while those to the European Union rose 8.7 per cent.

Imports rose 0.7 per cent in July to US$54.21 billion, compared with a gain of 4.3 per cent in June and 2.0 per cent expected by economists.

The monthly trade balance stood at a surplus of US$6.61 billion, narrower than the previous month’s US$9.08 billion, which was the biggest since September 2018. REUTERS