South Korea's March exports grew for a second month but missed market expectations, suggesting a softening outlook as a global trade war triggered by U.S. President Donald Trump's tariffs raises uncertainty for manufacturers.
Fresh U.S. tariffs on automobiles will kick in this week, and Trump has also threatened duties on chip imports and reciprocal tariffs on all countries, rattling investors worried about a sharp global economic downturn.
Outbound shipments from Asia's fourth-largest economy stood at $58.24 billion, up 3.1% from a year earlier, government data showed on Tuesday. They compared with a median 3.5% increase forecast in a Reuters poll of economists.
Exports of semiconductors rose 11.9%, the biggest gain in three months, while automobiles grew 1.2%, as a jump in hybrid sales offset a drop in electric vehicles.
Steel products dropped 10.6%, the biggest downturn since June 2024. South Korea is the fourth-largest exporter of steel to the United States, which imposed a 25% tariff on steel products from last month.
"Exports are expected to fall from April when there will be reciprocal tariffs and duties on automobiles," said Chun Kyu-yeon, an economist at Hana Securities.
"While there could be some front-loading in chip exports, that is still difficult for high-end products. And, there are talks automakers will raise prices due to tariffs."
Last week, SK Hynix (000660.KS), the world's second-largest memory chipmaker after Samsung Electronics (005930.KS), said some customers had brought forward orders ahead of U.S. tariffs. Hyundai Motor (005380.KS) has warned U.S. dealers it is evaluating its pricing strategy.
According to a separate survey on Tuesday, South Korea's factory activity shrank in March on weak domestic demand, but export orders jumped at the fastest pace in 14 months on strong demand in the United States and the Asia-Pacific region.
By destination, shipments to the United States rose 2.3%, but those to China fell 4.1%. Exports to the European Union jumped 9.8% on a boost from ship sales, while those to Southeast Asia climbed 9.1%.
Imports grew 2.3% to $53.29 billion, resulting in a preliminary trade surplus of $4.99 billion for March.
On average per working day, exports were up 5.5% in March.
