South Korea's Exports Rise 4.1% Despite US Tariff Threats

South Korea's economy showed strong performance this month, with exports increasing by 4.1% compared to the same period last year. This growth was driven by robust demand for semiconductors, which saw a 16.5% increase, and automobiles, which recorded a 3.9% surge. However, the steel industry faced a 9.7% decrease due to the pressure of a 50% US tariff.

Despite the positive export figures, concerns about the market outlook persisted due to the looming US tariff policy. The market value of goods under shipment, adjusted for working days, increased by 4.1% in the first 20 days of the month. However, unadjusted exports decreased by 2.2%, and imports went down by 4.3%, resulting in a trade surplus of $465 million. This was below June’s 6.8% surge, indicating a slight slowdown in export growth.

The US tariff policy, marked by aggressive tariff hikes and a shift toward protectionism, continues to cloud the outlook for South Korea's economy. The August 1 deadline for the recently increased tariff rate has ratcheted up economic tension, with South Korea facing a 25% tariff, though it is currently delayed. Tariffs on key industries such as auto and steel remain active, and semiconductors are also expected to be hit with tariff rates from August 1.

In response to these tariff threats, US trading countries have rushed to negotiate exemptions and strike broader trade deals. However, South Korea has been lagging behind in these negotiations due to a long period without strong leadership after the denouncement of Yoon Suk Yeol. The government introduced a supplementary budget of 31.8 trillion won ($23.3 billion) to boost growth and protect the economy from outside threats. The central bank also lowered interest rates to 2.5% and reduced its growth prediction to 0.8% after the economy shrank in the first quarter.

Shipments to the US fell by 2.1%, and imports decreased by 28.4%. Shipments to China fell by 5.9%, while exports to the European Union rose by 3%. The strong performance of South Korea's semiconductor industry has been a key factor in the export growth, with shipments increasing by 21.8% and raising economic growth by 8.3%.

Despite the positive export figures, the ongoing US tariff jitters and the global economic slowdown pose potential challenges for South Korea's export-driven economy. The uncertainty surrounding US trade policies has made it difficult for businesses to plan for the future, and any sudden changes in tariff policies could have a significant impact on export volumes. However, South Korea's advanced manufacturing capabilities and innovative technology sector have enabled it to maintain its competitive edge in the global market, making it a leading exporter of high-value products.