South Korea’s May Exports Dip Amid Tariff Pressure Despite Strong Chip Demand

South Korea’s exports likely declined in May for the first time in four months, as rising U.S. tariff pressures outweighed strong demand for semiconductors, according to a Reuters poll of 16 economists. The median forecast anticipates a 2.7% year-on-year drop, marking the first decline since January.

The country, Asia’s fourth-largest economy and the first major exporter to release monthly trade data, will announce its May export figures on Sunday, June 1 at 9 a.m. (0000 GMT).

In April, exports rose 3.7% despite a 6.8% fall in U.S.-bound shipments, largely due to robust semiconductor sales—particularly high-end chips used in AI. However, economists caution that the strength in chip exports may reflect preemptive buying ahead of potential tariffs. Chun Kyu-yeon of Hana Securities noted that concerns over U.S. duties on semiconductor imports could have led to early orders in May.

Preliminary data for the first 20 days of May showed exports down 2.4%, with shipments to the U.S. plunging 14.6% and exports to China dropping 7.2%. President Trump’s administration has already imposed 25% tariffs on South Korean automobiles and steel, and proposed additional duties on semiconductors and pharmaceuticals. A 10% baseline tariff remains in effect as broader reciprocal measures are paused pending negotiation.

Economists warn the downturn signals broader trade concerns. Stephen Lee of Meritz Securities emphasized that falling exports to both the U.S. and China suggest weakening global demand. He forecasts continued declines in Q2 following a drop in Q1 exports—the first in 18 months.

Imports are expected to have declined 3.1% in May, deeper than April’s 2.7% fall. The trade surplus is projected at $4.61 billion, slightly below April’s $4.88 billion.