Export to the US Plummets, Trade Deficit Widens Again
Data released by the Korean Customs on Tuesday shows that South Korea's exports in the first 20 days of October fell by 7.8% year-on-year, marking the largest decline in three months. Although some of the decline was attributed to fewer working days due to the Chuseok holidays, the sharp drop in exports to the US was a major drag. Data shows that exports to the US plummeted by 24.7% year-on-year, reaching USD 4.2 billion, and still fell by 10.3% on a daily average basis.
Analysts pointed out that recent US tariff measures on certain industrial and high-tech products are having a direct impact on South Korea's industrial chain. Sales of South Korean automobiles, machinery, and chemical products to the US have declined significantly, with some manufacturers forced to delay shipment plans. Meanwhile, fluctuations in the Korean won exchange rate and rising transportation costs have also weakened export competitiveness.
At the same time, imports fell by 2.3% to USD 32.9 billion, expanding the trade deficit to USD 2.8 billion, reflecting the dual pressure of slowing external demand and weak domestic consumption. Economists warn that if exports do not rebound in November, South Korea's quarterly trade performance may turn negative once again.
Strong Semiconductor Exports Support Export Structure
Despite overall sluggish export performance, the semiconductor industry continues to show resilience. Data indicates that semiconductor exports in the first 20 days of October reached USD 8.5 billion, a year-on-year increase of 47%, marking the fastest growth in nearly two years. The proportion of semiconductor exports rose to 28.3%, up by 6.6 percentage points from the same period last year, becoming the largest support for South Korean exports.
Industry analysts believe this growth is due to the rebound in memory chip prices and increasing demand for AI servers. Both SK Hynix and Samsung Electronics saw an increase in shipments, with significant increases in orders for AI servers, smart devices, and high-performance computing chips.
Park Jae Hwan, a researcher at the Korea International Trade Association, stated: "Semiconductors remain a key engine of South Korea's economy, and if prices continue to rise, export growth could see a structural recovery in the fourth quarter."
However, he also noted that the rebound in the chip industry is still in its early stages, and if global IT demand does not recover as expected, export growth may be limited.
Decline in Exports to China Puts Pressure on Manufacturing
Aside from the US market, South Korea's exports to its largest trading partner, China, also fell by 9.2% to USD 6.6 billion, mainly due to weak demand for electronic components, petrochemical products, and steel. Analysts believe that the structural adjustment of Sino-Korean trade continues, with South Korean companies gradually shifting some orders to Southeast Asia and India to hedge against single-market risks.
The Korean Ministry of Trade, Industry, and Energy pointed out in a statement that global manufacturing sentiment has not yet recovered, and external demand remains weak. Particularly, US-China trade tensions and geopolitical uncertainties are affecting the stability of South Korea's export structure.
Holiday Effects and Global Demand Weakness Intertwined
Customs data show that South Korea's export value in the first 20 days of October was USD 30.1 billion, down USD 2.6 billion from the same period last year. Officials explained that due to the long Chuseok holiday reducing working days by about two days, the overall export value faced temporary suppression. If calculated on a working day-adjusted daily average basis, actual growth is 9.7%, indicating that some industries remain active.
Analysts believe that this increase mainly stems from concentrated shipments of semiconductors and energy equipment, rather than a sign of a broad-based export recovery. Lee Tae Hoon, an economist at South Korea Investment & Securities, stated: "The current export rebound is more cyclical than trend-based, as non-chip sectors like automobiles and chemicals are still contracting."
Short-term Fluctuations May Continue; Government Expected to Increase Stimulus
Looking ahead, South Korea's export situation remains complex. Fluctuations in international oil prices, uncertainties in the global supply chain, and adjustments in US trade policy could all become key variables affecting South Korea's foreign trade. The Korean government expects that fourth-quarter export growth will remain moderate, with the annual export value possibly declining slightly.
To cope with external pressures, Seoul authorities are studying measures to expand export credit support and reduce energy import costs. Korean Ministry of Finance officials stated that if the dollar continues to strengthen and tariff frictions are not alleviated, the government may consider launching an "Export Stability Plan" in November to maintain manufacturing competitiveness.
