The sudden 5.2% drop in South Korean exports in the first 20 years of April suggests US tariffs are really hitting Asia’s fourth-biggest economy. Though figures for the full month will come later, this series is a key bellwether for where activity is heading. Shipments of cars and steel, subject to 25% US tariffs in recent months, were most impacted, falling 6.5% and 8.7% year on year, respectively. By contrast, semiconductors, which are exempt from the tariffs for now, rose a solid 10.7%.
By destination, exports to the EU and Taiwan rose YoY 13.8% and 22.0%, respectively, probably due to strong vessel activity and semiconductors. We believe that vessels and semiconductors are likely the two main drivers of exports this year; other sectors are expected to decline quite sharply. Exports to China, the US, and Vietnam declined by 3.4%, 14.3% and 0.2%, respectively. We assess that the US-China tariff war is negatively affecting Asia’s export trends in general.
Imports for the first 20 days in April dropped 11.8% YoY. Energy imports declined the most (-27.9%) and semiconductors fell 2.0%. Falling global commodity prices could be the main reason. We suspect Chinese semiconductor imports might have declined quite sharply, as they are largest Chinese imports item to Korea.