Lee Gyu-lee is a business writer at The Korea Times, focusing primarily on IT & telecommunications, the Ministry of Trade, Industry and Energy and KOTRA. Prior to this, she has covered a wide range of cultural news, from film, television and K-pop to lifestyle and fashion.
Trump tariffs hit Korea's exports for May
Containers are stacked at a port in Pyeongtaek, Gyeonggi Province, Sunday. Yonhap
By Lee Gyu-lee
Decline may mark beginning of deeper disruptions: experts
Korea's exports suffered a year-on-year decrease in May and those to the United States had a significant drop of over 8 percent, signaling that the fallout from the Donald Trump administration's tariff policies has begun to take a toll on Korea's exports.
According to the Ministry of Trade, Industry and Energy on Sunday, the country's overall exports in May fell by 1.3 percent to $57.27 billion compared to the same month last year, marking the first decline since January. Until January this year, Korea’s exports had recorded year-on-year growth for 15 consecutive months since October 2023, and also from February to April this year.
Exports to the U.S. dropped 8.1 percent to $10 billion with a sharp decline in the automotive sector, which is Korea’s largest export sector to the country.
Car exports fell by 32 percent to $1.84 billion, far outpacing the 19.6 percent drop recorded in April, when Trump's car tariffs took effect. This suggests that the impact of the tariffs is materializing with sustained downward pressure on the country's car industry.
The fall of automotive exports overshadowed improvements in petroleum and secondary battery exports, which respectively recorded 23.1 and 33.6 percent year-on-year growth in May.
Exports to China in May also slipped by 8.4 percent, dragged down by decreases in major export items such as semiconductors, machinery and petroleum products, which fell by 14.6 percent, 13.6 percent and 20.9 percent, respectively.
U.S. President Donald Trump shows his planned tariffs in the Rose Garden at the White House in Washington, D.C., April 2. Reuters-Yonhap
The downturn comes as the Trump administration’s tariffs continue to weigh on key industries, dampening overall export performance, introducing significant uncertainty on whether this slump will persist into June.
“Exports have declined to both major markets, the U.S. and China, indicating that U.S. tariff measures are impacting the global economy as well as our exports,” Industry Minister Ahn Duk-geun said in a press release.
Experts warn that the worst of the tariff impact may still lie ahead. Hur Jung, a professor of economics at Sogang University, noted that May’s decline only marks the beginning of deeper disruptions to Korea's trade in the coming months.
"The impact of the tariffs didn’t fully come into effect yet in the first half of this year. But, starting from June extending into the second half, we will be seeing the impact becoming more tangible. The drop in exports is essentially a direct result of these tariff measures,” he said.
Lee Tae-kyu, a senior research fellow at the Korea Economic Research Institute, added that along with the tariff-related pressures, broader global economic headwinds have also contributed to the weakening export figures.
“Last year’s numbers (on exports) were exceptionally strong, so many expected this year’s exports to be lower. The U.S. economy had negative growth last quarter, and it’s clearly showing signs of a slowdown,” he said.
“And since the U.S. is our top export market, the Trump tariffs are certainly having an impact … It’s a complex situation.”
Visitors attend Exports Voucher Matching Fair 2025 at Gangnam District, Seoul, May 21. Yonhap
The recent ruling by a U.S. trade court invalidating Trump's sweeping tariffs briefly raised hopes for a possible reprieve in trade tension between the U.S. and Korea, which have been negotiating on a July 8 deadline. However, as a federal appeals court reinstated his tariff imposition while the court "considers the motions paper,” following the administration’s appeal to the initial ruling, the prospect of any immediate relief has been thrown back into question.
Hur said there’s the possibility that the case will be tried in the Supreme Court, which will prolong the uncertainty, with the final outcome remaining unclear, further complicating the outlook for exporting businesses.
“During Trump’s first term, he won three cases on item-specific tariffs on the grounds of Section 232 — which restricts a particular good’s import for national security — in the appeals court … However, this time, it’s different on whether (sweeping ‘reciprocal’ tariffs) fall under (legitimate) emergency action to safeguard national security,” he said.
“Ultimately, we’re in a very uncertain situation that will probably continue until the Supreme Court’s ruling, which would likely continue into the end of the year. From the perspective of businesses, tariffs are already being applied because of the injunction (on the initial ruling). And with the final decision still months away, it’s very challenging for companies to make revenue or investment plans right now.”
Meanwhile, the industry minister vowed that the government will continue to communicate with the U.S. government to clearly reiterate its position seeking an exemption from all reciprocal and item-specific tariffs.
“The government will minimize the damage to our exporters and maximize national interests by clearly communicating our position to the U.S. government regarding tariff measures to seek mutually beneficial solutions,” he said.
“At the same time, we will swiftly implement a budget to respond to the tariff measures, including 150 billion won ($183.9 million) for trade insurance for small and medium-sized enterprises and 84.7 billion won for the voucher program.”