South Korea Export Slump Signals Global Trade Pain From US Tariff Hikes

South Korea's exports declined in May for the first time in four months, signaling early damage from growing global trade tensions sparked by US President Donald Trump's aggressive tariff policy.

Government data released Sunday showed a 1.3% drop in exports compared to May 2024, totaling $57.27 billion, Reuters said.

This decline, though smaller than economists' forecasts, reflects falling demand from South Korea's two biggest trading partners: the United States and China.

"Declines in exports to both the United States and China... suggest US tariff measures are having an impact on the global economy as well as our exports," said South Korean Industry and Trade Minister Ahn Duk-geun.

Exports to the US dropped 8.1%, while shipments to China fell 8.4%. These two markets make up over a third of South Korea's total exports, putting its economy at risk when trade frictions rise.

Trump's 25% tariffs on South Korean steel and aluminum—currently paused for 90 days—have already affected car shipments.

Exports of cars fell 4.4% in May, partly due to these tariffs and factory changes at Hyundai's new plant in Georgia.

Semiconductor Boom Offsets South Korea's Export Slump

Despite these challenges, there were bright spots. Exports of semiconductors rose sharply, jumping 21.2%, thanks to strong global demand for advanced memory chips.

Shipments to Taiwan also increased by 49.6%, and exports to the European Union rose 4%.

According to WION, imports into South Korea also dropped by 5.3% to $50.33 billion. That left the country with a trade surplus of $6.94 billion—the highest since June 2024.

Trump's latest announcement to double global tariffs on steel and aluminum to 50% has increased pressure on South Korean trade officials.

Although the US and China agreed to a trade pause in mid-May, Trump recently accused Beijing of breaking the deal, threatening new tariffs and raising fears of more disruption.

South Korea, known for its export-driven economy, often reflects larger trends in global trade.

With both the US and China facing rising tensions, experts worry that South Korean industries—from auto to electronics—may face greater uncertainty in the months ahead.

Originally published on vcpost.com