Due to a sharp drop in exports to the US, South Korea's exports continued to decline on a year-on-year basis in the first 20 days of May.

Early trade data from Korea shows that exports, especially to the United States, have dropped again this month. Negotiations between Seoul and Washington regarding US tariffs on Korean exports are still ongoing. Data released by Korean customs on Wednesday showed a 2.4% decrease in exports in the first 20 days of May compared to the same period last year. In contrast, the initial export report adjusted for differences in working days in April showed a 0.7% decrease. Overall imports decreased by 2.5%, resulting in a $300 million trade deficit. Exports to the United States dropped by 14.6%. President Trump has imposed a 25% tariff on exports of cars, steel, and aluminum. He has also imposed a 25% tariff on exports to Korea, which was temporarily reduced to 10% for 90 days starting in early April during negotiations. Exports of cars and car parts decreased by 6.3% and 10.7%, respectively, while exports of steel products decreased by 12.1%. Semiconductors are Korea's largest source of overseas income, helping to maintain a 17.3% growth in overall exports. Korea's economy's reliance on exports makes it particularly vulnerable to President Trump's trade policies. However, political uncertainty ahead of the presidential election has hindered efforts to reach an agreement early. The 25% tariff on car imports poses a real threat to Korean car manufacturers, as government data shows that by 2024, nearly half of Korea's $70.8 billion car exports go to the United States. Cars and car parts are one of Korea's largest exports to the US. Analyst Cho Chuel from the Korea Institute for Industrial Economics and Trade said, "It is meaningless to push for an early agreement unless Korea manages to compromise on the car tariff issue." Minimizing the impact of Trump's tariffs will be a top priority for Korea's next leader, who will need to revive the Korean economy, which was hit by a political crisis sparked by last year's brief martial law declaration by the former president. The two main candidates who voted early on June 3 have differences on how to negotiate with the US. Leading in opinion polls, opposition candidate Lee Jae-myung has said there is no rush to reach an agreement, while conservative People Power Party candidate Kim Moon-soo has pledged to seek an early summit with Trump to resolve the tariff issue if elected. Bloomberg economist Hyosung Kwon said, "A strong area is semiconductor shipments, which are rapidly increasing due to global demand for computer chips. But exports of other goods appear fragile possibly inflated due to early shipments in an effort to reach a trade agreement amid temporary waivers on tariffs by the US." The two countries will hold working-level talks in Washington this week to follow up on consecutive talks held last week in Korea by trade representatives from both countries, when global trade representatives gathered for the Asia-Pacific Economic Cooperation (APEC) meeting. Taking into account the impact of Trump's tariff movements, a government-funded think tank recently lowered its economic growth forecast for Korea to 0.8% by 2025. Despite being one of the earliest countries to start trade negotiations with the US, Korea has stated that it is unlikely to reach any agreements before the June election.