South Korean exports dip as US tariffs take toll, government unveils $20.5 billion aid plan for businesses

South Korea, the fourth largest Asian economy, saw its exports slip 2.4% year-on-year in the first 20 days of May, weighed down by weaker sales to major trade partners including the United States.The Korea Customs Service reported on Wednesday that exports from May 1 to May 20 totalled $32 billion. Though demand for semiconductors remained strong, the broader picture showed signs of strain, especially as trade tensions with Washington escalated.Exports to the United States, Seoul’s long-standing ally, plunged 14.6% over the same period last year, after Washington imposed sweeping 25% tariffs on South Korea. Though the US temporarily lowered the rate to 10% for a 90-day period starting in April, key items like steel, aluminium and cars remain subject to the full levy of 25%.The country also recorded a slight trade deficit of $300 million for the May 1–20 period, as imports slipped 2.5% year-on-year to $32.2 billion.Early data suggested the impact is spreading across sectors. While chip exports, driven majorly by high-tech demand linked to AI, surged 17.3%, shipments of cars and steel dropped by 6.3% and 12.1% respectively. Other key categories, such as petroleum products, home appliances and wireless devices, also suffered double-digit falls.Shipments to China and the European Union also fell, down 7.2% and 2.7% respectively.The finance ministry said on Wednesday that it would inject 28.6 trillion won (US$20.5 billion) in emergency financial support to help cushion businesses from the tariff shock.“The government is taking a preemptive approach to the impact of tariffs by formulating an all-ministry export strategy,” the ministry said in a statement, quoted by AFP. It further added that efforts were underway to “fundamentally strengthen the ecosystem of high-tech industries such as semiconductors, AI, and secondary batteries.”Following a second round of ministerial talks last week, Seoul is now engaged in working-level discussions with Washington in hopes of a complete tariff. A finalised trade package is expected by early July.