South Korea exports stay solid on chip demand despite US tariffs

SEOUL - South Korea’s exports held up, buoyed by strong semiconductor and auto shipments, underscoring manufacturers’ resilience in the face of sweeping US tariffs.

Overseas shipments gained 1.3 per cent in August from a year earlier, customs data showed on Sept 1, following a 5.8 per cent increase in July. On a working-day adjusted basis, exports gained 5.8 per cent, after rising at the same pace in July.

Imports declined by 4 per cent, bringing the trade balance to a surplus of US$6.5 billion (S$8.35 billion). 

August marked the third straight monthly gain, offering some relief for the export-reliant economy.

But the reprieve may be fleeting, as the effort to front load shipments ahead of higher tariffs is expected to fade, and potential semiconductor tariffs threaten to sap momentum. 

The last-minute agreement with Washington in late July spared South Korean manufacturers from the worst-case scenario, as US President Donald Trump had threatened to impose a 25 per cent levy on South Korean imports.

Still, the new levy set at 15 per cent marks a shift from decades of a tariff-free regime guaranteed by the bilateral trade pact.

The central bank last week warned tariff impacts would ripple through the economy via trade, financial markets and business sentiment.

Trade is expected to absorb the biggest hit, with exports to the United States shrinking as higher costs erode competitiveness and weaker American demand reduces orders.

The data also came after South Korean President Lee Jae Myung’s first in-person summit with Mr Trump, during which the two leaders reaffirmed their commitment to strengthening economic ties and pledged to expand cooperation on advanced manufacturing and supply chains,

Bank of Korea (BOK) governor Rhee Chang-yong said at a policy briefing last week that exports had risen more than expected despite higher US tariffs, led by chips and autos.

He said the gains lifted 2025’s gross domestic product growth forecast by about 0.2 percentage point, while cautioning that tariff effects could intensify over time.

The bank kept its 2026 growth outlook at 1.6 per cent.

“While there are concerns about chip tariffs, the current upturn in the semiconductor cycle is lasting longer than we expected,” Dr Rhee told reporters on Aug 28, after the BOK left its policy rate unchanged at 2.5 per cent. “If exports remain strong, it could provide additional upside for the economy.” BLOOMBERG