South Korea’s exports remain strong as US tariff threat looms

Despite growing fears of fresh US tariffs, South Korea’s exports held up in early July. This refelects that the trade-dependent economy is still showing resilience. But officials in Seoul are on edge, as the clock ticks toward an August 1 deadline when broader US duties could take effect.

Early July exports signal momentum

According to data released by South Korea’s customs office on Monday, exports rose 4.1 per cent in the first 20 days of July after adjusting for working-day differences, compared to the same period last year. While that’s slightly below June’s 6.8 per cent growth, it marks a solid performance amid rising global trade tensions.

Unadjusted exports, however, dipped 2.2 per cent. Imports fell 4.3 per cent, resulting in a trade surplus of $465 million. As per Bloomberg, the figures may calm near-term concerns over export demand but reveal underlying risks from deepening global protectionism.

Tariff risks remain as Trump deadline nears

South Korea is racing to secure a trade deal with the United States ahead of the August 1 deadline, when US President Donald Trump is expected to decide on a 25 per cent reciprocal tariff on all Korean goods. While that broader measure is still paused, key industries are already feeling the pinch. Auto and steel exports continue to face sector-specific duties, and Trump has warned that semiconductors, South Korea’s top export, could be next.

Steel shipments dropped 9.7 per cent in early July, reflecting the impact of the existing 50 per cent tariff. Meanwhile, exports to the US fell 2.1 per cent, and imports from the US plunged 28.4 per cent, signalling the strain on bilateral trade.

Political setbacks hamper Seoul’s response

South Korea’s response has been delayed by months of political gridlock following the impeachment of former President Yoon Suk Yeol. The new administration under President Lee Jae Myung is now trying to speed up talks with Washington, but Seoul still lags behind other allies in securing tariff exemptions.

To support the economy, the government has rolled out a supplementary budget worth 31.8 trillion won ($23.3 billion), aimed at shielding households and industries from external shocks.

Semiconductors shine, but outlook still fragile

Despite the uncertainty, semiconductors, South Korea’s largest export saw a 16.5 per cent rise in early July, offering some relief. Auto exports also climbed 3.9 per cent. However, shipments to China, a key market, slipped 5.9 per cent, while exports to the European Union rose 3 per cent.

South Korea’s economy shrank in the first quarter of 2025, prompting the central bank to cut interest rates to 2.5 per cent and slash its annual growth forecast to just 0.8 per cent.

Early July trade figures show that South Korea’s export engine is still running, for now. But with the threat of sweeping US tariffs just days away, the outlook for Asia’s fourth-largest economy hangs in the balance.

(With inputs from agencies)