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[Journalism Internship] U.S. tariffs rattle Korea’s export backbone

Published: 11 Jun. 2025, 14:04 Updated: 11 Jun. 2025, 15:08

President Donald Trump announces reciprocal tariffs in the Rose Garden at the White House in Washington on April 2. [AP/YONHAP]

KIM NA-HYEON, NAM JOOCHAN, KIM YEJI

On April 2, U.S. President Donald Trump imposed a 25 percent “reciprocal” tariff on Korean goods, a move that has become a significant threat to Korea’s fundamental economic system — exports. Key shipments such as automobiles, semiconductors and shipping are expected to be struck hard by the decline in trade.

As the 90-day grace period started, the upcoming “2+2” discussions may prove critical for Korea to craft a strategic response and secure the future of its trade partnership with the United States. In these high-stakes talks, Korea aims to push for tariff exemptions in key industries while emphasizing the mutual benefits of a stable, longterm economic alliance.

Whirlwind for Korean exports

Korea is one of the world’s major exporting countries, with economic growth driven mainly by exports to countries such as China or the United States, as shown by the Korea Total Trade of Goods & Services of Nominal quarterly GDP recording 85.733 percent in December 2024. Out of all partners, the United States accounted for 18.3 percent, having reached a record of $683.8 billion in exports last year. However, as President Trump imposes a 25 percent reciprocal tariff, this number is expected to drop.

According to the Export and Import Status for April report released by the Korea Customs Service on the 21st, Korea’s exports from April 1 to 20 totaled $6.1 billion. This marks a 14.3 percent decrease compared to the same period last year.

The sharp increase in tariffs has already directly reduced the export rate to the United States, as Korean goods become less price-competitive in the U.S. market than before. Key sectors such as automobiles, semiconductors and the shipping industry are likely to suffer the most, with companies facing pressure to either absorb the added cost or pass it on to consumers.

Given the Korean economy’s heavy reliance on exports, these tariffs pose a significant threat, as shown by the rapid decline. Reflecting this uncertainty, the governor of the Bank of Korea, Rhee Chang-Yong, acknowledged the possibility of negative growth in a press conference held at the central bank’s headquarters on April 17, stating, “It feels as if we’ve suddenly entered a dark tunnel.”

How tariffs will affect business

As Korea’s economy is dependent on the export of goods, tariffs on Korean products are a significant threat to the nation’s economy. Since Korea and the United States signed an FTA in 2007, for 18 years, the two nations were favorable trade partners as mutual tariffs on both countries’ products were near zero. However, as Trump made his return to the White House, the FTA became meaningless.

As the Korea Customs Service announced that general trade with the United States faced a decrease, the policy quickly struck specific industries in Korea. One industry significantly vulnerable to the new policy is the automobile industry. For decades, the United States was a consistent consumer of Korean automobiles. Korea ranked third in the ranking of automobiles imported to the United States, according to Washington. It took up a huge part of Korea’s trade market and the United States was a reliable market for the automobile industry.

However, automobile exports to the United States decreased by 6.5 percent compared to the same period last year, seemingly proving that Korea’s automobile industry and trading markets have already entered a dark tunnel, and a further decrease in exports to the United States is expected when the 90-day grace period comes to an end.

Other industries, especially related to technology, have been affected by the tariffs. In April, exports of home appliances faced a rapid downfall compared to the same period last year at 30 percent, while computer products fell to 23 percent, petroleum products to 22 percent and mechanical equipment to 5.9 percent, according to the Korea Customs Service. Expectations around exports are not looking great, according to the current status.

Correlating with the decrease in exports, a decrease in profit in the shipping industry is expected as well. As exports decrease due to tariffs, container ships will carry fewer items and containers. A decrease in the need for container ships leads to a decrease in freight costs for shipping firms.

Seoul to push for tariff relief

As Korea and the United States prepare for the upcoming 2+2 ministerial meeting in Washington on April 24, expectations are building around how the two nations will address the newly imposed 25 percent reciprocal tariffs on Korean goods.

The meeting will bring together Korea’s Finance Minister Choi Sangmok and Trade Minister Ahn Dukgeun, along with U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer. This highlevel dialogue presents a crucial opportunity for Korea to respond strategically to one of the most serious trade challenges it has faced in recent years.

The most appropriate action for Korea is to weaken the implementation of the tariffs, while actively working toward sector-specific exemptions, particularly for its key export industries, as Finance Minister Choi told parliament.

According to statements made by Choi, the Korean government’s top priority is to reduce uncertainty for its exporters, who are now facing significant instability in one of their largest markets. Sectors such as semiconductors, automobiles and shipbuilding are especially vulnerable to this disruption. On April 22, at the Incheon International Airport, Minister Choi stated, “We’ll come back with ways to reinforce Korea-U.S. alliance.”

Reinforcing the possibility of a negotiated outcome, White House National Economic Council Chair Kevin Hassett confirmed on April 8 that Japan and Korea will be prioritized in upcoming trade talks. His statement highlights both countries’ importance as economic and strategic allies — and suggests that Seoul’s approach in the 2+2 meeting could find a receptive audience in Washington.

As Korea seeks to protect its economic interests while maintaining a strong alliance with the United States, Korea’s prime minister, Han Duk-soo, emphasized on April 22 that the upcoming talks aim to “open the door to mutually beneficial solutions through candid dialogue and cooperation,” which encapsulates Korea’s stance and willingness to participate in all possible negotiations to result in beneficial outcomes for both nations.

BY KIM NA-HYEON, NAM JOOCHAN, KIM YEJI [[email protected], [email protected], [email protected]]