Last month, the country's exports showed unexpected strength, lifted by robust semiconductor demand even as US tariffs weighed on trade.
South Korea's exports totalled $32 billion from May 1 to 20, down 2.4 percent from the same period last year, according to data from the Korea Customs Service.
Asia's fourth-largest economy was hit with a 25 percent across-the-board tariff by the United States -- although it was temporarily reduced to 10 percent for 90 days starting in early April.
Following a second round of ministerial-level trade talks last week, Seoul is now in working-level technical discussions with Washington, aiming to secure full tariff exemptions by finalising a trade package by early July.
Experts have suggested the rise in chip exports, including the high-tech ones needed for AI, could be due to stockpiling.
The auto industry accounts for 27 percent of South Korea's exports to the United States, which takes in nearly half of the country's car exports.
Seoul aims to leverage the talks with Washington with commitments to purchase more US liquefied natural gas (LNG) and offer support in shipbuilding, a sector in which South Korea is a leader, after China.
Cheong In-kyo, South Korea’s minister for trade, said for the entire month of May, the country’s “exports to the US and China are expected to decline as the impact of US tariff measures begins to materialise.”
Seoul's finance ministry announced Wednesday that it will deploy a total of 28.6 trillion won ($20.5 billion) in emergency liquidity and financial aid to support domestic firms impacted by US tariff measures.
“The government is taking a preemptive approach to the impact of tariffs by formulating an all-ministry export strategy,“ the ministry said in a statement.
South Korea's imports also fell 2.5 percent year-on-year to $32.2 billion in the first 20 days of May, resulting in a trade deficit of $300 million, according to the Korea Customs Service.
Due to escalating tariffs, experts now expect a meagre 0.4 percent growth in exports for the Asia-Pacific region this year -- a sharp slowdown from 5.7 percent in 2024, according to an APEC report released last week.
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