According to South Korea’s Ministry of Trade, in the first half of 2025, South Korea’s exports to the United States fell off a cliff. They experienced a 16.4% decrease in value and a 12.5% decrease in volume, presumably as a result of the tariff environment. This rapid demographic decline presents daunting economic challenges as South Korea’s working age population shrinks. It especially affects critical industries such as semiconductors, automotive, and white goods.
Semiconductor exports continue to power Korea’s ‘economic miracle,’ comprising the largest portion of Korea’s export portfolio. More importantly, they make up more than 20% of all exports, emphasizing their critical and vital importance. The country’s semiconductor trade has made him adamant about maintaining the country’s relationships with those biggest markets. China and the US have a uniquely big role to shape this dynamic. In this environment, South Korean exports especially have a tangled web to traverse as the nation goes through its own tariffs and the risk of retaliatory tariffs.
Semiconductor Sector Under Pressure
Korea’s semiconductor exports are the most impressive, considering their significant share of the overall Korean national economy. Exports to China alone represent 30% of Korea’s total chip export. In comparison, exports to the US make up only about 7%. The new tariff measures have created new uncertainty about this vital trade route.
Through the first half of 2025, semiconductor export levels remained relatively stable. Yet this trend reflected larger patterns of contraction seen across the rest of the culture sector. As anticipated tariff changes loom, South Korea is negotiating an exemption. Analysts warn that stringent reciprocal tariffs of 15% might be introduced, which would pose additional obstacles for Korean exporters. An unhappy perfect storm in exchanges may present disappointing news and lackluster markets. South Korea must agree to the best possible terms by the August deadline or face this grim fate.
Semiconductors are vital to almost every aspect of our economy and daily lives. When this critical sector is shaken, it sends ripples throughout the entire economy, affecting us all. In answer to these challenges, South Korea is quickly focused on technological investments to create a disruptive advantage. The country is building alliances to mitigate the effects of tariffs on its semiconductor shipments.
Automobile Exports Decline
Unfortunately, the automobile sector has not been immune to these challenges. Beginning in the first half of 2025, South Korea saw the value of its total auto exports decline by 2.1%. Despite that, the value of those exports was up by 5.6%. Exports to the US were most worrisome, tanking 20.6% in value and 19.7% in volume.
Electric vehicle competition has never been fiercer. Secondly, exports to the US have tanked, collapsing by a staggering 89.1% in value terms and 88.8% in volume terms. This decline raises alarming issues regarding the competitiveness of Korean EV producers. The competitive environment is rapidly becoming more challenging for everyone, as domestic and global competitors flood into the same space.
As a counter to the export hurdles, South Korea is accelerating domestic investment within its automotive sector. This strategic shift is an attempt to solidify its position in the competitive US market. One way to do that is by increasing imports of American-made goods. It will place a heavy emphasis on the energy and agriculture sectors to facilitate mutually beneficial trade relations.
Mixed Results for Other Export Sectors
Some parts of the economy are buckling from the effects of today’s trade policy, but others have fared surprisingly well. The biopharma industry is currently the brightest star in South Korea’s export firmament. The specialty has accomplished a stunning leap of +28.7% in value and +13.0% in volume. In that same vein, cosmetic exports showed equally impressive gains, increasing by 13.1% in value and 10.8% in volume.
Home appliance exports faced significant hurdles. From that angle, they fell by 10.7% in value and 11.7% in volume during this period. Steel exports took a severe hit. We saw a drop in coated and hot-rolled steel, for instance, not just to the US, but all around the globe, internationally as well.
The mixed results across different sectors indicate that while some areas are adapting and even thriving despite external pressures, others are still grappling with the consequences of tariffs and changing market dynamics.