What Risks Does South Korea Face from US Tariffs?
Click to start listening
Synopsis
South Korea's impressive manufacturing sector is both its strength and a potential weakness as it faces looming tariffs from the US. With global competitiveness in industries like semiconductors and shipbuilding, the nation must navigate tough negotiations to protect its economy. Discover how these dynamics are reshaping the landscape for South Korea's exports.
Key Takeaways
- Manufacturing constitutes 27.6% of South Korea's GDP.
- 44.4% of GDP is driven by exports.
- Key sectors include semiconductors and shipbuilding.
- US tariffs could lead to significant economic repercussions.
- Negotiations with the US are ongoing to avert tariffs.
Seoul, July 27 (NationPress) South Korea holds the second-highest manufacturing share in its gross domestic product (GDP) among major economies, as revealed by data on Sunday. This highlights its susceptibility to the stringent tariff policies of the United States.
The manufacturing industry constituted 27.6 percent of South Korea's GDP in 2023, significantly surpassing the OECD average of 15.8 percent, according to the National Assembly Budget Office (NABO).
South Korea ranked second among OECD nations, only trailing behind Ireland, which recorded 31 percent. In contrast, Germany and Japan had rates of 20.1 percent and 20.7 percent, respectively.
“While many developed nations are witnessing a shift towards a larger service sector, South Korea retains a commendably high level of manufacturing output,” the office noted. “Considering the scale of its economy, South Korea is still perceived as a nation with a considerable reliance on manufacturing.”
The manufacturing sector is fundamental to the Korean economy, with vital industries like semiconductors, rechargeable batteries, shipbuilding, and automobiles sustaining their competitive edge globally.
As a result of its manufacturing-driven economy, South Korea is highly reliant on exports, which serve as a crucial growth driver.
By 2024, exports represented 44.4 percent of the nation's GDP, markedly higher than the OECD average of 30 percent.
Among the G7 countries, Germany exhibited the highest export-to-GDP ratio at 41.8 percent, followed by France at 33.9 percent, Italy at 32.7 percent, and Canada at 32.4 percent. The US recorded a mere 10.9 percent.
In 2024, South Korea's export dependency on the US was reported at 18.8 percent, according to Yonhap news agency.
Given the nation's significant manufacturing ratio and its export reliance on the US, the anticipated reciprocal tariffs pose a serious risk to the economy.
Negotiations are intensifying between Seoul and Washington, as the Trump administration has warned that South Korea could face a 25 percent reciprocal tariff if no agreement is reached before August 1.
“Should the proposed reciprocal tariffs be enforced, the Korean economy could experience a profound impact,” stated Yang Joon-seok, an economics professor at the Catholic University of Korea.
“We must capitalize on our strengths in key sectors like shipbuilding and semiconductors during these negotiations,” he added.
Point of View
It is crucial to recognize that South Korea's economy is intricately linked to its manufacturing base and export activities. While tariffs pose a substantial risk, they also present an opportunity for South Korea to showcase its competitive sectors. Our nation must engage strategically in negotiations to safeguard its economic interests.
NationPress
27/07/2025
Frequently Asked Questions
What percentage of GDP does South Korea's manufacturing account for?
In 2023, South Korea's manufacturing sector accounted for 27.6 percent of its GDP.
How does South Korea's export dependency compare to other countries?
As of 2024, exports represented 44.4 percent of South Korea's GDP, significantly higher than the OECD average of 30 percent.
What are the potential impacts of US tariffs on South Korea?
The imposition of reciprocal tariffs could significantly affect the Korean economy, especially in its manufacturing sectors.
Which industries are crucial for South Korea's economy?
Key industries include semiconductors, rechargeable batteries, shipbuilding, and automobiles.
What is the current export dependency on the US?
South Korea's export reliance on the US was reported at 18.8 percent in 2024.
