South Korea’s early trade data show exports shrank after tariffs
The slowing momentum for exports underscores the risks to the country’s export-driven economy from Trump’s protectionist policies
[SEOUL] South Korea’s early trade data showed that exports contracted so far this month after US President Donald Trump stepped up his tariff campaign, clouding the growth outlook for the Asian export powerhouse.
The value of shipments adjusted for working-day differences fell 5.2 per cent from a year earlier in the first 20 days of April, according to data released on Monday (Apr 21) by the customs office. That compared with a 5.5 per cent rise reported earlier for the full month of March.
After hiking duties on imports of metals in March, Trump imposed a 25 per cent tariff on auto imports and a 10 per cent levy on all other shipments earlier this month. The slowing momentum for exports underscores the risks to South Korea’s export-driven economy from Trump’s protectionist policies.
The data will be closely watched for clues on how Trump’s protectionist policies are playing out in the real world.
South Korean officials have said they are looking to cut a “big” deal in talks with the US but it’s unclear how quickly an agreement can be reached as they prepare to elect the country’s next leader on Jun 3. Industry Minister Ahn Duk-geun and Finance Minister Choi Sang-mok will travel to Washington this week to kick start trade negotiations.
Unadjusted exports fell 5.2 per cent while overall imports decreased by 11.8 per cent, resulting in a trade shortfall of US$100 million.
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South Korea is the US’s sixth-biggest trading partner, with the Asian country’s surplus jumping about 25 per cent in 2024 from the previous year to about US$55.7 billion, a factor that Trump focused on when deciding so-called reciprocal levies.
The auto tariff presents a real threat to South Korean automakers since the US accounted for nearly half of the nation’s US$70.8 billion worth of vehicle exports in 2024, according to government data. Automobiles and auto parts are among South Korea’s biggest export items to the US.
If the Trump administration decides to press ahead with plans to impose tariffs on semiconductor imports, it could further hurt the South Korea industry that has been a bedrock of the country’s export-led economy.
The Bank of Korea decided to keep its benchmark interest rate steady at 2.75 per cent last week even as it cited a significant increase in downside risks to growth due to trade policies.
“The overall exports momentum is weak with growth slowing in April due to deteriorating trade conditions after expanding slightly in March,” governor Rhee Chang-yong said in a post-decision press conference.
The bank said growth weakened more than expected due to the impacts of US trade policy and domestic political uncertainty, warning that the economy could see negative growth in the first quarter. BLOOMBERG
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