South Korean exporters bear brunt of US tariffs

SOUTH Korean exporters, particularly small and medium enterprises (SMEs), are face mounting pressure from U.S. tariff policies, which have resulted in production halts, layoffs, and urgent strategic shifts, according to industry accounts and government data.

AI Brief

Korean exporters like Lee Seon-hui face major losses as US tariffs cancel orders and raise costs.
Many SMEs are struggling with inventory buildup, layoffs, and the costly search for new markets.
Tariff effects ripple across industries, with auto suppliers also warning of long-term damage to supply chains.

Lee Seon-hui, general manager of a food company in Chuncheon of Gangwon Province, saw orders worth over 100 million won abruptly canceled as her primary U.S. market contracted.

Exports to the United States previously constituted over 80 percent of her business, which produces seaweed snacks, chili paste, and soybean paste.

"The price competitiveness of our products has declined due to the influence of the U.S. tariff policy. If sales are sluggish and inventory is piled up in the U.S. market, then customers there will become more cautious when making purchases. And fixed expenses such as labor costs of the company will also continue to increase. The business that was originally progressing smoothly seems to have been put on hold," Lee said.

With half of her production lines idled and inventory accumulating, Lee is trying to find new markets, a costly and burdensome process.

"The company has to start over, from the design of product packaging to the production of brochures and even translation, all of which require a lot of time and energy. The burden is too heavy," she said.

A recent survey indicated 81 percent of affected SMEs report severe operational damage from U.S. tariffs, citing delayed or canceled orders and payment defaults. Many lack capital buffers, leading to layoffs, wage cuts, or closures. Others are hastily restructuring supply chains.

The ripple effects extend beyond direct exporters. Lee Il-gyu, general manager of a Korean auto parts supplier, warned that tariffs will inevitably hit suppliers for domestic automakers.

"Under the influence of the U.S. tariffs, suppliers mainly targeting domestic enterprises such as Hyundai and Kia are bound to be impacted as well. It is necessary to diversify the production system and supply chain," he said.

Meanwhile, South Korea's Ministry of Trade, Industry and Energy reported a 1.3 percent year-on-year export decline in May, the first contraction in four months. Seven of 10 major export categories fell, including automobiles, steel, petroleum products, and machinery.