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Korea pivots to trade with Taiwan, Vietnam as U.S. tariffs rattle foundation

Published: 30 Jun. 2025, 19:00

Containers are stacked high at Sinseondae and Gamman piers at Busan Port on June 30. [YONHAP]

As trade barriers rise and global trade dynamics shift, the once-dominant markets of the United States and China are gradually losing ground in Korea to emerging destinations like Taiwan and Vietnam — signaling a quiet but significant pivot in the nation’s trade strategy as U.S. tariff policies initiated under U.S. President Donald Trump take full effect.

According to trade statistics from the Korea International Trade Association (KITA) released Monday, the combined share of exports to the United States, at 18.53 percent, and China, at 18.21 percent, in the first five months of 2025 stood at a total of 36.74 percent. That marks a 1.46 percentage point drop from 38.2 percent during the same period last year. The figure also fell below the full-year 2024 level of 38.15 percent.

Since China joined the World Trade Organization in December 2001, the U.S. and China have accounted for close to 40 percent of Korea’s exports. In 2020, their combined share peaked at 40.33 percent. But with the reimposition of tariffs this year, Korea’s export dependence on both countries is declining simultaneously.

“Amid growing trade uncertainty, including new U.S. tariffs, Korean companies are reducing their reliance on the United States and China and diversifying into markets such as Asean and the European Union,” said Jang Sang-sik, head of trade trend analysis at KITA.

“China, once a complementary partner in global trade, is increasingly becoming a competitor, making exports to China more difficult.”

Instead, export shares have grown for Taiwan, up 2.28 percentage points; Vietnam, up 0.55 percentage points; Poland, up 0.32 percentage points; and Malaysia, up 0.24 percentage points.

Notably, Taiwan’s share rose from just 3.57 percent in January to May 2024 to 5.85 percent in the same period this year. Export value to Taiwan surged 62.5 percent, from $9.9 billion to $16.1 billion. Once Korea’s eighth-largest export market in 2015, Taiwan became fifth last year and now ranks fourth.

The sharp increase is largely driven by exports of semiconductors, including high bandwidth memory (HBM). Korea’s semiconductor exports to Taiwan jumped from $5 billion to $11 billion year-on-year — a 117.5 percent increase.

Export-ready cars are parked at a port in Pyeongtaek, Gyeonggi on June 30. [YONHAP]

“Korea exports HBM chips to Taiwan, which then manufactures AI accelerators for shipment to markets like the United States,” Jang explained. “While exports to Taiwan are mostly limited to semiconductors and equipment, the complementary nature of the relationship is driving growth.”

Looking at export categories, Korea’s reliance on semiconductors has intensified since Trump’s second inauguration. Semiconductors accounted for 21.2 percent of total exports from January to May this year, up from 18.86 percent in the same period last year — boosted by rising memory prices and demand for high-value chips like HBM and DDR5.

By contrast, cars accounted for 10.92 percent of exports, down 0.18 percentage points from 11.1 percent last year. This decline was largely due to the 25 percent U.S. tariff on vehicles and Hyundai Motor’s shift to domestic production at its Georgia plant, the Hyundai Motor Group Metaplant America, which began EV production in March.

Among Korea’s top three export items, petroleum products saw their share fall by 1.7 percentage points to 6.5 percent, while ship exports rose 0.48 percentage points to 4.16 percent.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KIM WON [[email protected]]