South Korea trade improves on tech boom, struggles with US tariffs

South Korea’s exports rebounded in June on the back of strong technology demand, but shipments to the United States and China remained under pressure, reflecting the lingering impact of US tariff threats and broader trade tensions. According to data reported by Reuters, overall exports from Asia’s fourth-largest economy rose 4.3 per cent in June from a year earlier to $59.80 billion. The result was slightly below economists’ median forecast of a 4.7 per cent gain, underlining a still uneven recovery for one of the world’s key bellwethers of global trade.

Semiconductor shipments lead growth

The standout performer was semiconductors, South Korea’s most important export. Shipments of chips increased for a fourth consecutive month, rising 11.6 per cent in June, though at the slowest pace in that streak.

Demand for advanced chips has remained solid even as broader factory activity has weakened. South Korea’s factory output contracted for a fifth straight month in June, with sluggish demand in Japan, China and the US offsetting some improvement in the domestic economy. Other tech-heavy sectors also offered mixed results. Exports of automobiles rose 2.3 per cent, thanks largely to robust electric-vehicle demand in Europe that offset weaker sales in the United States.

Tariff threats hit steel, appliances

While tech-related exports showed resilience, other key sectors were hurt by high tariffs, especially in the US market. Reuters reports that shipments to the United States fell 0.5 per cent in June, marking the third consecutive monthly decline, while exports to China fell 2.7 per cent for a second straight monthly drop.

Steel products exports fell 8.0 per cent, and home appliances plunged 15.6 per cent, under direct pressure from US tariffs. By contrast, exports of car parts rose 2.4 per cent, with automakers increasing local production in the US to sidestep some tariff costs. South Korea’s Trade Ministry noted exports to the European Union climbed 14.7 per cent, while those to Southeast Asian countries rose 2.1 per cent, suggesting that exporters are seeking to diversify markets to reduce reliance on China and the US.

Seoul braces for tariff uncertainty

The South Korean government acknowledged the difficult outlook, warning that tariff volatility and global demand uncertainties would likely persist through the second half of 2025. “Volatility in US tariff policy and economic recovery uncertainty are expected to persist in the second half,” Industry and Trade Minister Ahn Duk-geun said in a statement, as reported by Reuters, promising an “all-out response” to US tariff threats.

Seoul is currently negotiating with Washington for an extension to a 90-day pause in punitive US tariffs that is set to expire next week. A senior South Korean trade official told Reuters that talks are expected to continue past the deadline as both sides seek a deal. The US has imposed high tariffs on various sectors under President Donald Trump’s administration. A 25 per cent “reciprocal” duty on South Korean goods remains paused for negotiations. Meanwhile, China—South Korea’s biggest trading partner is also engaged in its own trade negotiations with the US, after both sides significantly reduced tariffs on each other’s goods in a truce reached in mid-May and a framework agreement last month.

Trade surplus hits multi-year high

Despite the sectoral challenges, South Korea posted its largest monthly trade surplus since September 2018, with the surplus reaching $9.08 billion in June. Imports rose 3.3 per cent to $50.72 billion, as domestic demand remained relatively steady. Analysts said there were reasons for cautious optimism about trade stabilisation, even as risks remained. “Optimism is growing around trade negotiations of major countries and tariffs are unlikely to be raised even more, though it is too early to say exports have bottomed out,” Lee Jeong-hoon, an economist at Eugene Investment, told Reuters.

As the global trade environment remains tense and US tariff policy under President Trump remains unpredictable, South Korea’s strategy is likely to focus on both defending access to key markets and accelerating its push into new ones.

(With inputs from the agencies)