S. Korea Exports Stay Solid on Chip Demand Despite US Tariff

(Bloomberg) -- South Korea’s exports held up, buoyed by strong semiconductor and auto shipments, underscoring manufacturers’ resilience in the face of sweeping US tariffs.

Overseas shipments gained 1.3% in August from a year earlier, customs data showed Monday, following a 5.8% increase in July. On a working-day adjusted basis, exports gained 5.8%, after rising at the same pace in July. Imports declined by 4%, bringing the trade balance to a surplus of $6.5 billion.

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Semiconductor exports jumped 27%, driven by demand for high-performance chips used in artificial intelligence, while vehicle shipments gained 9%. Exports to Southeast Asian nations rose almost 12% in August, a third consecutive advance, driven by strong shipments of semiconductors and vessels, according to a statement from the trade ministry.

The Trump administration said Friday it’ll revoke waivers for Samsung Electronics Co. and SK Hynix Inc. to use US technologies in their Chinese operations, posing risks to South Korea’s exports.

“In the short term, a direct impact on Korea’s semiconductor exports is unlikely, but if maintenance equipment requires case-by-case US approval, that could affect Samsung and SK Hynix’s production in China,” said Hyosung Kwon, a Bloomberg economist. “Over the longer run, restrictions may make it harder to upgrade to advanced processes at Chinese plants. That could reduce output in China — and boost Korean chip exports to the country.”

What Bloomberg Economics Says...

“We expect shipments to continue to hold up in September as firms rush to get goods out the door ahead holidays in early October. Still, the bigger picture is less benign — pressure from US tariffs will probably start to register more clearly in the fourth quarter.”

— Hyosung Kwon, economist

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The two firms run major chip plants in China that rely on American equipment and software, meaning the change could hamper production, limit supply to Chinese customers and add uncertainty to global technology supply chains. Samsung and SK have 120 days until the waiver expires, and can seek licenses to continue operations, according to an announcement in the US Federal Register.

Meanwhile, overall shipments to the US plunged 12% in August from a year earlier, and exports to China slipped 2.9%, the trade ministry said.

Story Continues

August marked the third straight monthly gain for total shipments, offering some relief for the export-reliant economy. But the reprieve may be fleeting, as the effort to front-load shipments ahead of higher tariffs is expected to fade, and potential semiconductor tariffs threaten to sap momentum. President Donald Trump has threatened to impose new tariffs on US imports of semiconductors, saying that in some cases the levies could reach 300%.

The last-minute agreement on trade with Washington in late July spared Korean manufacturers from the worst-case scenario, as Trump had threatened to impose a 25% levy on South Korean imports.

Still, the new levy set at 15% marks a shift from decades of a tariff-free regime guaranteed by the bilateral trade pact. The central bank last week warned tariff impacts would ripple through the economy via trade, financial markets and business sentiment. Trade is expected to absorb the biggest hit, with exports to the US shrinking as higher costs erode competitiveness and weaker American demand reduces orders.

Steel is among the sectors hardest hit by the US tariffs, with overall exports plunging more than 15% last month from a year earlier, after Trump doubled duties on US imports of steel and aluminum to 50% in early June.

The data also came after South Korean President Lee Jae Myung’s first in-person summit with Trump, during which the two leaders reaffirmed their commitment to strengthening economic ties and pledged to expand cooperation on advanced manufacturing and supply chains.

Bank of Korea Governor Rhee Chang Yong said at a policy briefing last week that exports had risen more than expected despite higher US tariffs, led by chips and autos. He said the gains lifted this year’s GDP growth forecast by about 0.2 percentage point, while cautioning that tariff effects could intensify over time. The bank kept its 2026 growth outlook at 1.6%.

“While there are concerns about chip tariffs, the current upturn in the semiconductor cycle is lasting longer than we expected,” Rhee told reporters last Thursday, after the BOK left its policy rate unchanged at 2.5%. “If exports remain strong, it could provide additional upside for the economy.”

(Updates with more details, including economist’s comments.)

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