South Korea's March Exports Rise Amid Trade War Concerns

South Korea's exports rose for a second consecutive month in March, signaling resilience but also revealing cracks amid growing global trade tensions. According to government data, outbound shipments reached $58.24 billion, marking a 3.1% year-on-year increase. However, the figure fell short of the 3.5% growth forecast in a Reuters poll, underscoring a softer-than-expected outlook.

Export growth was driven by semiconductors, which surged 11.9%—the strongest in three months—while automobiles rose 1.2%, boosted by hybrid vehicle sales despite a decline in electric vehicles. In contrast, steel exports plunged 10.6%, the steepest drop since June 2024, following a 25% U.S. tariff imposed last month. The U.S. is South Korea’s third-largest steel market.

Economists warn that fresh U.S. tariffs on automobiles and potential levies on chip imports could hit South Korean manufacturers hard. Chun Kyu-yeon of Hana Securities noted that while there may be a temporary boost in chip exports, high-end products remain vulnerable, and automakers may be forced to raise prices.

SK Hynix confirmed that some chip orders were front-loaded ahead of new U.S. duties, while Hyundai Motor is reviewing its pricing strategy in response to the tariffs.

Despite challenges, South Korea’s export orders showed strength. A separate survey revealed that while factory activity contracted in March due to weak domestic demand, export orders surged at the fastest pace in over a year, particularly from the U.S. and Asia-Pacific.

By region, exports to the U.S. rose 2.3%, the EU saw a 9.8% gain led by ship sales, and Southeast Asia climbed 9.1%. However, shipments to China, South Korea’s top trading partner, declined 4.1%.

Imports increased 2.3% to $53.29 billion, resulting in a trade surplus of $4.99 billion. Per working day, exports were up 5.5%.