South Korea’s export-driven economy is facing a pivotal moment as a swirl of new U.S. tariffs, shifting global demand, and robust government interventions create a landscape of both challenge and opportunity. The latest figures and policy moves reveal a nation determined to stay ahead of mounting trade headwinds, even as its traditional strengths are tested by global economic realignments.
On September 1, 2025, the Korea Ocean Business Corp. (KOBC) announced that the KOBC Container Composite Index (KCCI) dropped 1.6% to 1,909 points, according to the Japan International Freight Forwarders Association (JIFFA). This decline signals a cooling in container export rates from Busan, one of Asia’s busiest ports, with rates fluctuating across major trade lanes. While routes to the U.S. West Coast and East Coast nudged upward—rising 1.19% to US$1,871 per FEU and 0.83% to US$2,923 per FEU, respectively—European lanes took a sharp hit, with rates falling 5.79% to US$3,797 per FEU. The Mediterranean also saw a 2.69% decline to US$2,931 per FEU. Non-main routes were a mixed bag: Latin America’s west coast gained 2.78%, Australia jumped 3.52%, but the east coast of Latin America plummeted nearly 10%. Intra-Asia trade rates to China held steady, but Japan and Southeast Asia both saw modest declines.
Despite these fluctuations, South Korea’s broader economic indicators paint a picture of resilience. On July 2025, the country posted a current account surplus of US$10.78 billion—the largest ever recorded for any July—extending its surplus streak to 27 consecutive months, as reported by the Bank of Korea (BOK) on September 4, 2025. This surplus, while lower than June’s all-time monthly high of US$14.27 billion, underscores the enduring strength of Korean exports and the nation’s ability to weather global shocks.
From January to July 2025, the cumulative current account surplus reached US$60.15 billion, up from US$49.21 billion during the same period last year. The goods account was the hero here, logging a US$10.27 billion surplus in July alone. Exports advanced 2.3% year-on-year to US$59.78 billion, while imports edged down 0.9% to US$49.51 billion. The services account, however, registered a US$2.14 billion deficit, driven mainly by a surge in overseas travel demand—a sign that Korean consumers are eager to head abroad as pandemic restrictions fade into memory. Meanwhile, the primary income account, which tracks wages of foreign workers, dividend payments, and interest income, logged a US$2.95 billion surplus.
But the winds are shifting. According to BOK official Song Jae-chang, "The new U.S. tariff policies have begun to affect exports, particularly shipments of automobiles, auto parts and steel products." As reciprocal tariffs took effect in August, he warned, "the impact is expected to become increasingly apparent." Policymakers and industry leaders are watching closely, as these tariffs threaten to chip away at one of Korea’s economic pillars.
Still, South Korea is not standing still. The government responded decisively on September 3, 2025, announcing a sweeping package of policy support measures aimed at exporters hit by the new U.S. tariffs. A total of 13.6 trillion won in policy funds will be distributed through institutions such as the Korea Development Bank, Export-Import Bank of Korea, Credit Guarantee Fund, Technology Guarantee Fund, and the Small and Medium Business Corporation. The Korea Development Bank, for instance, will increase loan limits for affected companies by tenfold and slash interest rates by 0.3 percentage points—raising the loan ceiling for small and medium-sized firms from 3 billion won to 30 billion won, and for mid-sized firms from 5 billion won to 50 billion won. Support will also extend to companies with lower credit ratings, broadening the safety net.
Trade insurance supply has been ramped up to a record 270 trillion won for 2025, with a 60% discount on insurance and guarantee fees now extended to all industries. The government is also boosting guarantees for small and medium-sized exporters to the U.S., increasing the limit from 300 billion won to 500 billion won. Exporters will benefit from 420 billion won in export vouchers, a doubling of the logistics expense limit, and a 90% reduction in usage fees at 55 joint distribution centers in the U.S.
Specialized support is on the way for steel and aluminum derivatives companies, with 570 billion won earmarked for customized aid, including a secondary preservation project expected to provide 150 billion won in loan support. Emergency allocation tariffs on key steel raw materials are also planned by the end of the year, aiming to ease cost burdens for exporters. The Korea International Trade Association is stepping in with a loan program offering preferential rates as low as 1.5% for affected firms.
Measures to help small and medium-sized enterprises include expanded customs-related information, more in-depth consulting on tariff content value, and incentives for large and medium-sized companies to run tariff response cooperation programs with their suppliers. The government is also encouraging companies to explore new export markets, expanding guarantees for those entering countries beyond their usual destinations. With K-beauty exports on the rise, plans are in place to build two distribution centers dedicated to cosmetics in the U.S., and a program will soon launch to help promising firms in high-growth sectors—such as fashion, lifestyle, and food—break into overseas markets.
Looking at the bigger economic picture, the Bank of Korea recently revised up its estimate for second-quarter GDP growth to 0.7%, compared to an earlier 0.6%. This improvement followed a 0.2% contraction in the first quarter, ending the nation’s longest stretch of near-stagnant growth since the 1997 Asian financial crisis. Exports surged by 4.5% in Q2, fuelled by strong global demand for semiconductors and petrochemicals. Analysts, including those at Goldman Sachs, JPMorgan, and Citi, have all nudged up their growth forecasts for Korea, citing stronger-than-expected second-quarter results and the country’s knack for adapting to adversity.
Yet, policymakers remain cautious. New U.S. tariffs on chips, steel, and vehicles under Section 232 of the U.S. Trade Expansion Act, as well as tightened supply-chain rules, are looming over Korean exporters. While there’s been an agreement in principle to lower U.S. tariffs on Korean vehicles from 25% to 15%, the deal hasn’t been formalized, leaving automakers in limbo. In response, Korean carmakers are actively diversifying their export markets, targeting the European Union and Australia to hedge against U.S. risks. Meanwhile, semiconductor exports are projected to remain robust through 2026, offering a much-needed buffer.
In a nod to the future, the government is also considering joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) to expand its global market reach. This move, however, remains contentious, especially among agricultural and fisheries sectors wary of increased competition and potential imports from regions like Fukushima, Japan.
South Korea’s economic story in 2025 is one of grit, agility, and strategic investment. While global trade winds are shifting and new barriers are rising, the nation’s commitment to supporting its exporters and adapting to a changing world remains unwavering.
