Projected Decline in Korea's Exports Amid U.S. Tariff Adjustments

The Korea Institute for Industrial Economics and Trade (KIET) has released a concerning forecast, predicting a 1.9% decrease in Korea's total export value this year. This comes after the U.S. adjusted its tariff on Korean automobiles and related items from 25% to 15%, a decision made during last month's Korea-U.S. tariff negotiations.

Significant Impact on Export Companies

Despite the reduction from the initially proposed 25%, the new 15% tariff rate marks a substantial increase from previous near-zero levels, posing significant challenges for Korean export companies.

Detailed Analysis by KIET

KIET's analysis, shared with the Ministry of Trade, Industry and Energy, highlights an expected $12.6 billion decrease in exports to the U.S. this year. This represents a nearly 10% year-on-year decline, with automobiles and machinery being the most affected sectors.

Overall Export Performance at Risk

Given that the U.S. was Korea's largest export destination last year, accounting for 18.7% of total exports, the tariff adjustment could lead to a noticeable downturn in Korea's export performance.

Potential for Change

However, KIET notes that Korea's annual export performance could still shift, influenced by factors such as a boom in the global semiconductor market. This perspective is echoed by the Korea Development Institute's revised forecast, which now predicts a 1.2% increase in goods export growth.