South Korea’s exports expanded for the second consecutive month in March, though the growth fell short of market forecasts, indicating a potential weakening in the economic outlook, as manufacturers face heightened uncertainty due to the global trade tensions sparked by U.S. President Donald Trump’s tariff policies.
New U.S. tariffs on automobiles will begin this week, and Trump has also threatened duties on chip imports and reciprocal tariffs on all countries, rattling investors worried about a sharp global economic downturn.
Government data released on Tuesday showed that South Korea’s exports—a key indicator for Asia’s fourth-largest economy—rose 3.1% year-on-year in March, reaching $58.24 billion. However, the growth fell slightly short of the 3.5% increase economists had predicted in a Reuters survey.
South Korea’s exports posted modest growth in March, led by a rebound in semiconductor sales, rising by 11.9%, and the automobile industry grew by 1.2% with a rise in hybrid sales and a drop in electric vehicles. Government data released Tuesday showed outbound shipments rising 3.1% year-on-year to $58.24 billion, slightly below the 3.5% increase forecast by economists, according to Reuters.
Steel exports plummeted 10.6% year-on-year, marking the sharpest decline in nine months. The downturn comes after the U.S. imposed a 25% tariff on steel products last month as South Korea is the fourth-largest exporter of steel to the United States.
“Exports are expected to fall from April when there will be reciprocal tariffs and duties on automobiles,” said Chun Kyu-yeon, an economist at Hana Securities. “While there could be some front-loading in chip exports, that is still difficult for high-end products. And, there are talks automakers will raise prices due to tariffs.”
SK Hynix, the world’s second-largest memory chipmaker behind Samsung Electronics, revealed last week that several customers had accelerated orders to stockpile inventory before new U.S. tariffs take effect. Meanwhile, Hyundai Motor has warned its U.S. dealerships that it is evaluating its pricing strategy in response to the impending trade measures.
“Uncertainty of the global trade environment has become a huge threat to our export-led economy,” Han said.
According to a separate survey on Tuesday, South Korea’s factory activity shrank in March on weak domestic demand, however, export orders surged at their fastest pace in 14 months, driven by strong demand from the U.S. and Asia-Pacific regions.