Nearly 40% of 1,000 top exporters expect business to worsen with tariffs

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Nearly 40% of 1,000 top exporters expect business to worsen with tariffs

Published: 11 Jul. 2025, 17:41 Updated: 11 Jul. 2025, 20:07

Audio report: written by reporters, read by AI

Cargo waiting to be exported at the Pyeongtaek Port in Gyeonggi on June 30 [YONHAP]

Korea's export outlook isn't so great for the latter half of the year. Korean companies, quite unsurprisingly, cite U.S. tariffs as the biggest threat.

The Federation of Korean Industries (FKI) said Friday that more than half of the top 1,000 companies by revenue in 10 key export industries, or 53.3 percent, selected tariff policies under the Donald Trump administration as the biggest export risk in the second half of the year.

Other major concerns included "sluggish demand due to low global growth" at 14 percent and "intensifying trade tensions between the United States and China" at 12.7 percent.

A striking 92 percent of companies said a U.S. tariff increase of more than 15 percent would be "difficult to endure." Even if the rate remains below 10 percent, 42 percent said it would still pose a serious burden. The federation warned that if the 25 percent reciprocal tariffs proposed by the White House take effect on Aug. 1 as scheduled, Korean exporters will face significantly greater difficulties.

To respond to higher tariffs, 33.7 percent of companies pointed to cost-cutting measures, 33.2 percent indicated adjustments in export prices and 14.7 percent cited expanded overseas production. Another 14.2 percent said they have no clear countermeasure in place.

About 38.7 percent of respondents said they expect profitability from exports to worsen in the second half, while only 14 percent anticipated improvement. The remaining 47.3 percent said it would remain similar to the same period last year.

By industry, the outlook for export profitability was more negative than positive in seven sectors, including auto parts, automobiles, general machinery, petrochemicals and steel. Only two sectors — semiconductors and shipbuilding — had more companies forecasting improved profitability.

Cargo waiting to be exported at the Pyeongtaek Port in Gyeonggi on July 1 [YONHAP]

The main causes cited for worsening profitability included higher costs from tariffs at 44.8 percent, falling export prices due to tougher competition at 34.5 percent and rising labor and operational costs at 13.8 percent.

“The ongoing pressure from U.S. tariffs and weak global demand means short-term cost-saving measures are not enough,” said Lee Sang-ho, head of FKI's Economic and Industrial Research Department, stressing the need for trade agreements "that reflect Korea’s export strengths, as well as efforts to diversify export markets and strengthen export competitiveness."

A separate survey released Friday by the Korea International Trade Association of more than 400 trade industry professionals found that the top economic and trade pledge the new administration should prioritize is the implementation of a strategic trade policy aimed at maximizing national interests and strengthening industrial competitiveness, chosen by 20.7 percent of respondents.

The answer was followed by diversifying export items and markets at 20.3 percent, and helping domestic small and mid-sized businesses begin exporting at 18.1 percent.

A total of 43.3 percent of respondents said they expect exports to decline by more than 5 percent this year compared to last year. Just 17.8 percent expect an increase. A total of 71.1 percent said they believe exports will not begin to recover until next year or later.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY CHOI SU-NEUL [[email protected]]