Since President Donald Trump initiated his initial series of tariffs, the world has been closely watching for their impact on the global economy. This week, early effects have emerged, and the news isn’t encouraging. According to South Korea’s Customs Service, exports for the first 20 days of April dropped by 5.2% compared to the same period last year. Min Joo Kang, a senior economist at ING, identified this data as a “key bellwether” for future trade trends in a note released on Monday.
The decline in exports follows Trump’s imposition of a 25% tariff on aluminum, steel, and auto imports. Initially, all South Korean imports faced a potential 25% “reciprocal” tariff; however, Trump postponed this until July, opting for a temporary 10% tariff on most imports. The data reflects this impact, with car and steel shipments decreasing by 6.5% and 8.7%, respectively, compared to the previous year during the same timeframe. Notably, overall exports from South Korea to the U.S. fell by 14.3% year-over-year.
Despite the downturn, semiconductor exports showed resilience, increasing by 10.2% from last April. Currently, semiconductors are exempt from U.S. tariffs, although President Trump has expressed intentions to impose tariffs as high as 25% on these products. For now, the South Korean export data indicates that “U.S. tariffs are complicating global trade dynamics,” according to Kang. However, Lee Branstetter, an economics and public policy professor at Carnegie Mellon University, advises caution against drawing premature conclusions, as trade conditions can shift month to month.
Branstetter, who once served as a senior economist for international trade and investment under former President Barack Obama, expects similar trends to emerge in trade data from other American partners. However, he notes that the effects of new tariffs might take time to appear in trade statistics. The fluctuating nature of Trump’s tariff policies adds to the difficulty of deriving clear conclusions from upcoming trade data.
Some countries might report increased exports to the U.S. as they leverage the “reciprocal” tariff pause. Additionally, the uncertainty stemming from Trump’s trade strategies could be prompting businesses to delay international orders, potentially leading to export declines. Branstetter points out that one toy company recently halted orders from China fearing escalating tariffs.
The trade dynamics between South Korea and the U.S. could shift, depending on the outcome of upcoming discussions between South Korean Finance Minister Choi Sang-mok, Trade Minister Ahn Duk-geun, U.S. Treasury Secretary Scott Bessent, and U.S. Trade Representative Jamieson Greer. The Trump administration has emphasized its intent to prioritize trade agreements with allies like South Korea.
