South Korea’s exports to the U.S. have fallen by almost half. This downturn started exactly when former President Donald Trump enacted tariffs. The South Korean Customs Service recently announced an alarming 14.3% decline in total exports to the US this year versus last year. Worryingly, for the first 20 days of April, exports fell off a cliff by -5.2%.
The death knell was sounded when Trump imposed a 25% tariff on aluminum, steel and auto imports. This controversial move sent shockwaves across multiple industries. This development has radically changed world trade patterns, adding difficulty to an already complicated US-South Korea relationship. Semiconductor exports from South Korea jumped 10.2% y-o-y in the same period. Moreover, these exports continue to be exempt from the current US tariffs. Trump has announced intentions to slap tariffs of up to 25% on semiconductors later this year.
As of the first half of April, South Korean car shipments to the US were down 6.5% vs. last year. Steel shipments saw an even sharper drop, down 8.7%. These steep and deeply felt declines are blamed largely on trade disruptions caused by Trump’s tariffs.
Lee Branstetter, a professor of economics and public policy at Carnegie Mellon University, unfortunately, found the worst trend in the data. He thinks that it could be too early to draw hard and fast conclusions about the drop in exports. He expects the same sort of trends to show up in future trade data from other American partners.
“US tariffs are complicating global trade dynamics,” – Min Joo Kang, a senior economist at ING.
South Korean Finance Minister Choi Sang-mok and Trade Minister Ahn Duk-geun will meet with Treasury Secretary Scott Bessent and U.S. Trade Rep. This highly consequential meeting will be taking place as events on the ground develop. How these discussions play out will help determine the fate of bilateral trade relations between South Korea and the United States.
Secretary Min Joo Kang took our concern and highlighted just how critical these developments are. He described South Korea as a “key bellwether” in understanding the broader effects of international trade. If the United States and Europe can agree on strong standards, the negotiations could substantially reshape global trade. What happens here will have powerful ripple effects into their economic ties.
In addition to the China deal, Trump has repeatedly claimed he was negotiating deals with other countries that would be done within weeks. The world economy continues to closely monitor these negotiations as they progress, acutely aware of their potential impacts.