South Korea’s exports rise on semiconductors despite US tariffs

South Korea’s outbound shipments continued to grow late into the year as robust semiconductor demand helped offset the drag from expanded US tariff measures, official data and trade analysts said Monday.

Preliminary customs figures show South Korean exports climbed 6.8 % year‑on‑year in the first 20 days of December, marking an all‑time high for that period. Semiconductor exports surged 41.8 %, accounting for more than a quarter of total outbound shipments, a striking performance that helped lift overall trade figures despite weakness elsewhere.

However, the upward momentum for growth has not come without challenges. Other sectors, like shipments of cars, petroleum products, and traditional manufactured goods, remained subdued or contracted recently, with some of that weakness linked to higher US tariffs on automobiles and metals

Excluding the number of working days, exports during the first 20 days of December rose even more rapidly, by 3.6% compared with the same period last year, according to data released by the Korea Customs Service. That was far slower than the revised 13% increase recorded for the entire month of November.

The numbers indicate that while exports are still growing, the recovery is waning. 

Rising semiconductor demand drives exports higher

Semiconductors have remained the backbone of South Korea’s exports. Shipments in the category increased by nearly 42% from the same period last year, as a rebound that began earlier this year continued. The rapid expansion of artificial intelligence, cloud computing, and massive data centers has driven a significant part of the demand.

Chipmakers have seen orders for high-end memory products that power servers in artificial intelligence data centers. Technology companies worldwide are further expanding their capacity networks to house new applications, a trend that is fueling demand for high-end chips.

That partly explains why even export-oriented economies have struggled to create their own chip industries, transferring political and economic power to one of the world’s most dominant semiconductor producers — South Korea — but not to many others, which are still relative newcomers.

The wireless provision segment also had a strong quarter. That segment was almost 18% higher, as companies throughout the region increased their spending on overall network upgrades and digital infrastructure. The increases helped offset a lack of strength in some more traditional lines.

The recovery was lopsided, affecting all industries equally. Despite improving trade data and unresolved global trade tensions, auto exports are still down 13%  from a year earlier, as demand remains weak in major overseas markets. Moisture-sensitive petrochemical products have also been replaced in overseas business due to more expensive feedstock, imposed sales restrictions, and market tightness.

Tariffs and currency swings weigh on export outlook

Trade uncertainty continues to weigh on South Korean exporters. In late October, Seoul and Washington reached a breakthrough tariff deal after three months of negotiations. Koreans were partially relieved because it restricted the application of high trade duties by the United States against Korean goods to a maximum of 15%, rather than imposing more stringent trade barriers for Korea.

Tariffs on Korean cars and parts were also reduced to 15%, effective retroactively to November 1. The action stems from a notice published earlier this month in the US Federal Register. The deal has provided some relief, although it did not completely remove the favorable terms offered in the old agreement.

Even with the reductions, tariffs would still average far above pre-war levels. Exporters continue to face higher costs and squeezed margins, particularly in price-sensitive industries such as the automotive or chemical sectors. Business groups have cautioned that long-term tariff burdens could drain investment and hiring.

And while both headline and core inflation remain above the Bank of Korea’s own target of 2%. The country’s central bank and officials have warned that if the currency remains weak, the cost of imports — particularly energy and raw materials — will increase. Policymakers are closely monitoring whether the strength of exports will help offset those inflationary pressures.

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