South Korea’s Export Engine Sputters—May Sees 1.3% Drop

Another month, another dip—South Korea’s export machine isn’t firing on all cylinders. May’s 1.3% slide hints at global demand playing hard to get.

Tech, autos, and shipbuilding—the usual suspects—are stuck in first gear while traditional markets yawn. Meanwhile, analysts scramble to blame everything from weak yen to Fed policy (but never their own bad calls).

Funny how export ’headwinds’ always emerge right after quarterly earnings targets get missed. Coincidence? Probably not.

South Korea’s first priority will be to navigate US tariffs

Navigating Trump’s trade policy will be among the first tasks for the incoming South Korean president after the June 3 election. Seoul’s trade officials have been trying to secure a revised tariff agreement with Washington, but talks have made little headway. Officials say a leadership gap in Seoul has stalled progress. If no new deal is reached, the tariff will revert to 25%.

There is also uncertainty over whether the tariffs can take effect at all. A US federal appeals court has paused a ruling that could overturn much of Trump’s tariff strategy, yet the administration insists the duties will stand in one FORM or another.

Breaking down the May figures, the customs office reported auto exports dropped 4.4% year-on-year, while semiconductor shipments jumped 21.2%. Since chips and cars drive much of South Korea’s overseas sales, these shifts were significant. Exports to the US fell 8.1%, and sales to China were down 8.4%.

Meanwhile, the broader economy remains fragile. On Thursday, the Bank of Korea cut its benchmark interest rate to support growth and almost halved its forecast for 2025 amid concerns over trade uncertainty and weak domestic consumption. Governor Rhee Chang-yong indicated that further rate cuts could follow, pointing to slowing growth momentum.

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