Impacts of U.S. Tariff Policies on South Korean Exports: A Cautious Outlook

Published: 26 May 2025, 10:20

As South Korea navigates the complex waters of international trade, recent survey results have revealed a significant concern among exporters regarding the country’s shipments to the United States. According to a survey conducted by Mono Research, commissioned by the Federation of Korean Industries (FKI), exporters predict a troubling 4.9 percent decline in their U.S. export volumes for the year 2025 if current tariff policies persist.

Survey Insights: Export Outlook

The survey involved responses from 150 export-oriented firms among Korea’s leading 1,000 companies by sales. The general sentiment expressed by these businesses paints a picture of cautious optimism overshadowed by the potential negative impacts of tariffs. Electrical and electronics companies, in particular, expect the most considerable decline, averaging at about 8.3 percent. This is closely followed by the automobile and auto parts sectors, anticipating a drop of 7.9 percent, while the petrochemical and petroleum industries foresee a decrease of 7.2 percent. General machinery firms are braced for a 6.4 percent decline.

Sectoral Analysis

Diving deeper into the survey results, it’s interesting to note the diverging trends within various sectors. Shipbuilders and pharmaceutical companies stand out as exceptions in this climate of uncertainty, predicting increases in their U.S. exports of 10 percent and 1.6 percent, respectively. This suggests that while certain industries may struggle under the current tariff regime, others are identifying opportunities for growth.

Perception of Tariff Measures

Overall, the apprehension felt by the Korean exporters is palpable. A staggering 81.3 percent of respondents believe that the tariff measures will have negative repercussions for businesses on both sides of the Pacific. Interestingly, 14.7 percent indicated that the tariffs might adversely affect Korean firms while potentially benefiting their American counterparts. This indicates an awareness of the layered complexities involved in international trade dynamics, where the repercussions of tariff policies are not uniformly felt.

Recommendations for Government Action

Faced with these uncertain prospects, respondents made it clear that they expect proactive steps from the government. Approximately 44.6 percent advocated for negotiations aimed at minimizing tariff impacts. Others suggested diversifying export markets (13.6%), expanding the list of duty-free items (13.1%), and ensuring Korea receives tariff rates comparable to its global competitors (9.4%).

An FKI official emphasized the need for the government to vigilantly monitor tariff developments, eliminate non-tariff barriers, and craft negotiation strategies to mitigate adverse effects on domestic exporters. These suggestions reflect a strong desire for a collaborative approach to help navigate the turbulent waters of international trade.

The Bigger Picture

As this landscape continues to evolve, the implications of tariff policies extend beyond mere numbers. They affect not just the balance sheets of exporters but also the broader economic health of countries. The resilience and adaptability of South Korean industries will be put to the test in the coming year, as they seek to maintain their foothold in competitive markets while facing the challenges posed by tariff measures.

Ensuring that the momentum of growth in certain sectors like shipbuilding and pharmaceuticals continues, despite the overarching tariff challenges, will be crucial for South Korea as it strives to foster a robust and stable export economy.