South Korea's Exports Slip in May Due to U.S. and China Tariffs
South Korea reported a decline in exports for the month of May, marking the first fall in four months. The drop reflects the impact of continued trade tensions and tariffs imposed by the United States and China. As the fourth-largest economy in Asia, South Korea's trade performance often serves as an early indicator of global economic trends.
Export Figures and Market Breakdown
Exports in May fell by 1.3% compared to the same period last year, totaling approximately $57.27 billion. Notably, shipments to the two largest trading partners – the United States and China – experienced significant declines, decreasing by 8.1% and 8.4% respectively.
In contrast, exports to the European Union increased by 4.0%, while those to Southeast Asian nations modestly declined by 1.3%. Remarkably, exports to Taiwan surged by nearly 50%, reflecting strong demand in that market.
Industry-Specific Trends
The semiconductor sector experienced robust growth, with exports rising 21.2% due to sustained demand for advanced memory chips. However, the automotive industry faced challenges, with car exports dropping 4.4%. This decline is attributed to U.S. tariffs as well as shifting production to a new manufacturing facility in Georgia, United States.
Trade Balance and Import Data
Imports also decreased, falling by 5.3% to roughly $50.33 billion. Consequently, South Korea recorded a trade surplus of approximately $6.94 billion in May, its largest surplus since June 2024.
Impact of U.S.-China Trade Relations and Tariffs
The decline in exports aligns with ongoing global trade conflicts. Although the United States and China agreed to a temporary 90-day tariff truce in mid-May, tensions resurfaced following accusations of agreement violations and threats to impose more severe tariffs, including doubling steel and aluminum duties to 50%.
U.S. reciprocal tariffs on South Korean goods, currently paused for 90 days amid negotiations, remain a significant factor affecting export volumes.
Industry Perspectives
South Korea's Industry and Trade Minister highlighted that the reduction in shipments to major markets reflects the broader implications of U.S. tariff policies on both the global economy and South Korean exports.
