South Korea’s exports dropped in May, showing the growing strain on its economy as global demands soften and uncertainty over the US tariffs imposed by United States President Donald Trump worsens.
According to customs office data released on Sunday, exports declined by 1.3% compared to May last year, better than the 2.4% drop economists had forecast in a Bloomberg survey. Imports fell 5.3% over the same period, widening the country’s trade surplus to $6.9 billion.
The slide in exports comes as South Korea prepares for the full effect of US duties. In April, Trump slapped a 25% tariff on Korean imports—one of the harshest levies placed on a US ally—though this was temporarily cut to 10% for 90 days. He has also threatened to extend the tariffs to cover Samsung Electronics Co.’s mobile phones.
South Korea’s priority will be to navigate US tariffs
Looking for a way to navigate Trump’s trade policy will be among the first tasks for the incoming South Korean president after the June 3 election. Seoul’s trade officials have been trying to secure a revised tariff agreement with Washington, but talks have made little headway. Officials say a leadership gap in Seoul has stalled progress. If no new deal is reached, the tariff will revert to 25%.
There is also uncertainty over whether the tariffs can take effect at all. A US federal appeals court has paused a ruling that could overturn much of Trump’s tariff strategy, yet the administration insists the duties will stand in one form or another.
Breaking down the May figures, the customs office reported auto exports dropped 4.4% year-on-year, while semiconductor shipments jumped 21.2%. Since chips and cars drive much of South Korea’s overseas sales, these shifts were significant. Exports to the US fell 8.1%, and sales to China were down 8.4%.
Meanwhile, the broader economy remains fragile. On Thursday, the Bank of Korea cut its benchmark interest rate to support growth and almost halved its forecast for 2025 amid concerns over trade uncertainty and weak domestic consumption. Governor Rhee Chang-yong indicated that further rate cuts could follow, pointing to slowing growth momentum.
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