South Korea’s exports declined 6.1% in September

South Korea’s exports fell 6.1% in September as the impact of US President Donald Trump’s sweeping tariff measures outweighed the benefits of having more working days in the month.

This situation has illustrated how protectionist trade policies can have undesirable effects, which is also observed in data affected by holidays.

Regarding the decrease in South Korea’s exports, data from reliable sources revealed that the 6.1% decline in September was the lowest compared to the same period last year, after accounting for the number of working days.

This was after the overall exports surged by 12.7%, following a slight upswing of 1.2% in August. On the other hand, imports increased by 8.2%, resulting in a trade surplus of $9.6 billion. 

Trump’s extensive tariff policies threaten South Korea’s economic growth 

The recent data released indicated how the calendar affected business operations. Regarding the working days set, this year’s September had 22 official working days due to the October Chuseok holiday, while last year’s September had only 20 working days. 

The change observed in the working days boosted the monthly total but reduced the daily average. This decline ended a three-month streak of growth, according to reports. Following this information, South Korean officials and analysts concluded that the situation resulted from the tension triggered by Trump’s tariff policies, which caused exporters to send shipments out earlier before the policies took effect.  

The drop in South Korea’s exports demonstrates the difficult circumstances that exporters in the country face during this new phase of protectionism initiated by Trump’s presidency.

With these figures released, officials at the Bank of Korea might consider the urgency of resuming their monetary easing strategy when they review their policy on October 23. 

Notably, exports in South Korea play a significant role in the country’s economy. To support this claim, data released in 2024 showed that the sector accounted for more than 40% of the country’s GDP. Therefore, a significant decline in the sector weakens the country’s economy.

South Korea strikes a new deal with the US 

Considering the drastic drop in exports, South Korean officials have devised a strategy to enhance their relationship with the US. As part of the effort, the country has agreed to share monthly details with the US regarding its foreign-exchange interventions. It will also release annual information about its reserve currencies. 

This new deal aims to enhance transparency and solidify both countries’ commitments not to manipulate their currencies. In a joint statement issued on Wednesday, October 1, the US Treasury Department and the South Korean Ministry of Finance announced that this agreement was reached during ongoing trade negotiations.

They emphasized that any interventions must be limited to preventing severe market volatility or disorderly trading. Talks began in April, although the statement did not specify when these actions would take effect.

Meanwhile, Korea will share the monthly intervention data confidentially with the US Treasury and publicly announce annually its currency composition. Moreover, it will publish its market stabilization figures every four months and continue to release monthly data on reserves and forward positions, as mandated by the IMF.

In April, South Korean news media reported that a senior foreign exchange official had joined the trade team negotiating with the US. In June, the Treasury Department added South Korea to its watch list in a report on foreign exchange and called for the country to reduce its currency actions.

With this new deal, South Korean officials are optimistic that the country could be removed from the US monitoring list. This is because the two countries are working to finalize a trade deal inked in July, where Seoul pledged to inject $350 billion.

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