How is South Korea's Current Account Surplus Affected by US Tariff Pressure?
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Synopsis
In April, South Korea maintained its current account surplus for the 24th month; however, the surplus decreased due to the impact of U.S. tariffs. This article delves into the latest data from the Bank of Korea and examines the implications for South Korea's economy amidst ongoing trade tensions.
Key Takeaways
- Current account surplus maintained for 24 months.
- Surplus narrowed from $9.14 billion to $5.7 billion.
- Exports increased by 1.9 percent.
- U.S. tariffs impacting key industries.
- Need for adaptive policies amidst trade tensions.
Seoul, June 10 (NationPress) South Korea recorded a current account surplus for the 24th month in a row during April, although the surplus diminished from the preceding month, influenced in part by the United States' stringent tariff policies, as indicated by data from the central bank released on Tuesday.
The nation's current account surplus amounted to US$5.7 billion in April, a decrease from $9.14 billion in March, according to figures compiled by the Bank of Korea, as reported by Yonhap news agency.
South Korea has maintained a current account surplus every month since May 2023.
For the first four months of this year, the total current account surplus reached $24.96 billion, in contrast to $17.97 billion reported during the same timeframe last year.
The goods account recorded an $8.99 billion surplus in April, driven by a 1.9 percent increase in exports year-on-year, totaling $58.57 billion. Conversely, imports declined by 5.1 percent to $49.58 billion.
In contrast, the services account showed a $2.83 billion deficit in April, according to the central bank.
The primary income account, which monitors wages of foreign workers, overseas dividend payments, and interest income, experienced a $190 million deficit in April.
According to BOK official Song Jae-chang, “The impact of U.S. tariff policies is gradually becoming evident in exports of steel, aluminum, automobiles, and auto parts.”
He added, “If tariff effects intensify in the third quarter, we may witness a decline in domestic production and exports as production in the U.S. ramps up.”
In April, exports to the U.S. plummeted by 6.8 percent year-on-year, coinciding with the Trump administration's initiation of reciprocal tariffs on partner nations, including 25 percent duties on South Korean goods, although these tariffs were temporarily paused to facilitate bilateral negotiations.
A separate 10 percent baseline tariff and 25 percent duties on steel, aluminum, and auto-related products remain in effect.
South Korea and the U.S. have agreed to explore a “package” deal on trade and related matters before July 8, when the 90-day suspension on reciprocal tariffs is scheduled to end.
Point of View
It is crucial to acknowledge that while South Korea continues to show resilience with a current account surplus, the narrowing figures indicate the potential adverse effects of U.S. tariff policies. It is essential for policymakers and businesses to adapt to these changing dynamics to sustain economic growth.
NationPress
11/06/2025
Frequently Asked Questions
What was South Korea's current account surplus in April?
In April, South Korea's current account surplus reached $5.7 billion.
How does the current account surplus in April compare to March?
The surplus in April narrowed from $9.14 billion in March.
What impact have U.S. tariffs had on South Korean exports?
U.S. tariffs have begun to affect South Korean exports, particularly in steel, aluminum, and automobiles.
What is the cumulative current account surplus for the first four months of the year?
The cumulative current account surplus for the first four months stood at $24.96 billion.
What agreements have South Korea and the U.S. reached regarding tariffs?
South Korea and the U.S. have agreed to pursue a “package” deal on trade issues before July 8.
