The first exposure of South Korea's April trade data revealed the substantive impact of Trump's aggressive protectionist policies on export-oriented economies.
Data released by South Korean customs authorities on Monday showed that, after adjusting for working days, the country's exports fell 5.2% year-on-year in the first 20 days of April, sharply contrasting with a 5.5% growth in March. This figure reflects the risk of global supply chain disruptions caused by America's trade protectionist policies and serves as a warning bell for global export-oriented economies, with South Korea acting as the "canary in the coal mine."
Breaking it down by country, South Korea's exports to the U.S. and China fell 14.3% and 3.4%, respectively, in the first 20 days of April, while exports to the EU increased by 13.8%. In terms of product categories, South Korean automobile exports dropped 6.5% year-on-year during the same period, while semiconductor exports grew 10.7%. Steel exports declined 8.7%, and oil sales plummeted 22%.
Tariff Storm Triggers Global Chain Reactions
According to comprehensive reports from CCTV, following the increase in metal import tariffs in March, Trump imposed a 25% tariff on auto imports and a 10% tariff on all other imported goods earlier this month. His trade protectionist policies pose significant risks to export-driven economies like South Korea.
Min Joo Kang, an economist at ING, stated in a report:
Today's data shows that U.S. tariffs are disrupting global trade dynamics. Due to the current exemption for semiconductor tariffs, we believe demand for high-end chips remains strong. However, traditional chip markets may weaken due to supply chain disruptions and escalating trade tensions.
Hyosung Kwon, an economist at Bloomberg, pointed out:
In addition to the direct impact of tariffs, the slowdown in the U.S. economy reducing demand for South Korean products will also cause harm. Indirect spillover effects generated through global supply chains by trade partners coping with their respective tariff impacts could also drag down exports.
South Korean officials said they are seeking a "significant" trade agreement with the U.S., according to the Global Times. U.S. Treasury Secretary Scott Bechtel stated on April 14 that Washington will launch tariff negotiations with Seoul this week.
Critical Industries Face Severe Threats; Bank of Korea Warns on Economic Outlook
As the sixth-largest trading partner of the U.S., South Korea's trade surplus with the U.S. rose about 25% year-on-year in 2024, reaching approximately $55.7 billion. Automobiles and automotive parts are among South Korea's largest export items to the U.S.
Therefore, the auto tariff poses a serious threat to South Korean automakers. According to government data, in 2024, the U.S. accounted for nearly half of South Korea's $70.8 billion in automobile exports.
If the Trump administration proceeds with its plan to impose tariffs on semiconductor imports, it could further damage the semiconductor industry, which is a pillar of South Korea's export-oriented economy.
The Bank of Korea decided last week to keep its benchmark interest rate unchanged at 2.75%, noting that downside risks to growth have significantly increased due to trade policies. Governor Rhee Chang-yong stated in a press conference after the decision:
The overall momentum of exports has weakened, and growth slowed in April due to deteriorating trade conditions, while there was slight expansion in March.
The central bank said growth has been weaker than expected due to the influence of U.S. trade policies and domestic political uncertainties, warning that the economy may experience negative growth in the first quarter.
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