South Korea’s exports are forecasted to fall by 2.0% year-on-year in April 2025, marking the first decline in three months, as the impact of U.S. President Donald Trump’s tariffs on automobiles and steel starts to weigh heavily on the Asian export powerhouse. This projection comes from a Reuters survey of 22 economists conducted between April 23-28, providing an early indication of global trade tensions affecting one of the world’s largest exporting nations.
The decline follows a 3.0% rise in March and contrasts with the 10.1% plunge in January, which was influenced by the Lunar New Year holiday calendar effects. The tariffs include a 25% levy on automobile imports effective from April 3 and a 25% tariff on steel imports from March 4, alongside a 10% blanket tariff on other goods. Although “reciprocal” tariffs on South Korea are suspended for 90 days, the overall tariff environment is already dampening export momentum. Data from the first 20 days of April underscore the trend: exports dropped 5.2% year-on-year, with shipments to the United States falling sharply by 14.3%, while exports to China also declined by 3.4%. Specific sectors felt the strain, with automobile exports down 6.5% and steel products falling 8.7%. In contrast, semiconductor exports – the country’s largest export category – rose by 10.7%, providing some cushion against the overall downturn.
Economists warn that the tariffs are not only affecting current trade figures but also casting a shadow on future exports, especially with potential tariff hikes looming on auto parts and semiconductors amid ongoing U.S.-China trade tensions. Stephen Lee of Meritz Securities noted that tariff impacts are now visible in both soft and hard data, while Hana Securities’ Eun Ky-ye highlighted the growing reality of these negative effects.
South Korea’s automotive industry is increasingly pessimistic about prospects due to tariff pressures, whereas chipmakers remain optimistic, buoyed by strong global demand. The country’s central bank has acknowledged these mixed signals amid a challenging economic environment, with the Bank of Korea forecasting a slowdown and recently reporting a 0.2% contraction in Q1 2025 GDP. The political backdrop further complicates trade negotiations. With South Korea heading into a snap presidential election on June 3, officials have indicated that reaching a comprehensive trade deal with the U.S. before then is “theoretically impossible.” The acting government is seeking tariff exemptions and cooperation on energy and defense but faces hurdles due to the unsettled political climate.
South Korea’s official April trade data is expected on May 1 and will be closely watched as a barometer of global trade health amid escalating tariff disputes. As Asia’s fourth-largest economy and an early monthly reporter, South Korea’s export performance offers a critical preview of the broader impact of U.S. trade policies on global commerce.In summary, South Korea’s export decline signals the tangible consequences of Trump’s tariff strategy, with significant pressure on key industries and trade partners. While semiconductors provide some resilience, the overall outlook remains cautious amid geopolitical uncertainties and ongoing trade tensions.