South Korea’s early exports sputter ahead of Trump’s tariffs
Exports represent the biggest component of South Korea’s economy, led by shipments of semiconductors
SOUTH Korea’s exports have lost momentum so far this month, dimming the 2025 outlook for an economy overshadowed by political turmoil and the potential impact of Donald Trump’s tariff plans.
The value of shipments adjusted for working-day differences decreased 2.7 per cent from a year earlier in February, according to data released on Friday (Feb 21) by the customs office.
In headline figures distorted by more working days compared with last year, exports grew 16 per cent while overall imports increased by 7.7 per cent, resulting in a trade surplus of US$804 million. The Lunar New Year holidays came in January this year, whereas a year earlier they were in February.
Exports represent the biggest component of South Korea’s economy, led by shipments of semiconductors. A global rush to develop artificial intelligence technology has been a boon for companies such as SK Hynix and Samsung Electronics that produce advanced memory chips.
Their outlook is turning increasingly gloomy after Trump unveiled a series of tax initiatives following his inauguration in January. The risk of a global trade war has become dangerously real after the president announced 25 per cent levies on steel and aluminium imports that will take effect in March and reciprocal tariffs on numerous trading partners that are expected to hit in April.
“The uncertainty is extremely high and the primary cause is the impact of Trump’s tariff policies on Korea’s export industries,” said Lee Seung-suk, a researcher at the Korea Economic Research Institute. “There are considerable concerns in sectors such as steel and automobiles. Unless there are measures to ease the tariffs, a decline in exports this year seems inevitable.”
The trade risks add to concerns for an economy hamstrung by stagnant consumption and political turmoil that has weighed on consumer confidence. After President Yoon Suk-yeol imposed martial law briefly in December, he was arrested on charges of insurrection, and the Constitutional Court is deliberating whether to finalise his ouster.
With headwinds for the economy intensifying, the central bank cut its growth forecast for this year last month and is set to meet for an interest-rate decision next week. The Bank of Korea pivoted to an easing cycle with a rate cut in October and followed that with another reduction in November.
Weak export growth is a concern for the central bank given the economy’s heavy reliance on trade. South Korean companies are widely embedded across global supply chains, including automobiles, rechargeable batteries, shipbuilding and refined oil. BLOOMBERG
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