South Korean exporters predict a 4.9% decrease in shipments to the United States (US) in 2025 if current US tariff policies remain unchanged, according to a survey released on May 26, 2025.

The survey, conducted by Mono Research for the Federation of Korean Industries (FKI), gathered responses from 150 export-oriented firms among South Korea’s top 1,000 companies by sales.

The largest declines are expected in electrical and electronics exports, projected to fall by 8.3%. This is followed by automobiles and auto parts at 7.9%, petrochemicals at 7.2%, and general machinery at 6.4%.

Conversely, shipbuilders and pharmaceutical companies expect growth in US exports, with projections of increases of 10% and 1.6%, respectively.

Additionally, the survey revealed that 81.3% of respondents believe that tariffs will negatively impact businesses in both countries. Meanwhile, 14.7% think the measures will harm South Korean firms but benefit US companies.

🔗 Source: The Korea Times

🧠 Food for thought

1️⃣ South Korean companies deploy investment diplomacy to counter tariff impacts

Rather than simply accepting tariff-related losses, major Korean companies are engaging in “friendshoring” by dramatically increasing US investments to bypass tariff barriers.

Hyundai Motors announced a massive US$21 billion investment in US manufacturing, including an electric vehicle plant in Georgia, representing a strategic pivot from exporting to local production 1.

This approach aligns with the Korean government’s broader economic strategy, which includes a substantial US$254 billion pledge to assist exporters and diversify markets away from the United States 2.

The investment-focused response contrasts with traditional retaliatory tariffs and demonstrates how export-oriented economies are adapting to the new trade environment through capital deployment rather than confrontation.

Such investments benefit both countries by preserving Korean companies’ US market access while creating American jobs.

2️⃣ Sector-specific vulnerabilities reveal Korean economy’s structural exposure

The stark contrast between sectors in expected tariff impact—from electrical/electronics (-8.3%) and autos (-7.9%) to shipbuilding (+10%)—highlights how trade exposure varies dramatically across Korea’s industrial landscape [original article].

South Korea’s automotive sector is particularly vulnerable because the US represents over 20% of its total automotive sales, making the new 25% auto tariffs especially damaging to its economic outlook 3.