Korean Export Companies Forecast Decline Due to U.S. Tariffs... Exports Down 4.9%, Operating Profit Down 6.3%

Survey Commissioned by FKI and Mono Research
150 Responding Companies Project "Export Volume Will Decrease"
Electric and Electronic Sector Forecasts 8.3% Decline
"Need to Minimize Tariffs Through Negotiations"

Korean companies that focus on exports are expressing concerns about a potential decline in performance this year due to U.S. tariffs.

The photo shows containers piled up at the Busan Port Sinsundae Pier yard on the 30th. Photo by Yonhap News

The Federation of Korean Industries announced on the 26th that, according to a survey conducted by Mono Research targeting export companies among the top 1,000 companies by sales, 150 responding companies projected that if the current U.S. tariff policy continues, their export volume this year will decrease by 4.9% compared to last year.

By industry, the projected decrease rates are as follows: electric and electronic (down 8.3%), automobiles and parts (down 7.9%), petrochemicals and petroleum products (down 7.2%), general machinery (down 6.4%), semiconductors (down 3.6%), and steel (down 2.8%). In contrast, exports of ships and medical/bio-health products are expected to increase by 10.0% and 1.6%, respectively, despite the U.S. tariff policy.

If the U.S. tariff policy continues, Korean export companies' sales and operating profits are expected to decline by 6.6% and 6.3%, respectively. Notably, 81.3% of responding companies anticipated that the U.S. tariff policy would have a negative impact on companies in both countries, while 14.7% responded that it would be negative for Korean companies but positive for American companies.

The main management difficulties cited due to the U.S. tariff policy included: increased uncertainty due to frequent policy changes (24.9%), deterioration of the global economy (24.0%), decrease in exports to the U.S. (18.8%), increased foreign exchange risk (17.5%), and damages from Chinese dumping exports (10.5%). On a practical level, more than half of the respondents (53.4%) pointed to price adjustment negotiations with U.S. importers as the main challenge, followed by obtaining information on U.S. customs clearance procedures (21.3%) and information on rules of origin (13.3%).

As for companies' response strategies, diversification of export markets (26.9%) was the most cited, followed by global production structure reorganization (19.8%), strengthening foreign exchange risk management (16.5%), establishing joint response systems within the industry (15.1%), strengthening raw material risk management (12.3%), and delaying or reducing investments (7.6%). When asked about the expected duration of global uncertainty caused by the U.S. tariff policy, the most common answer was 6 months to 1 year (42.7%), followed by 1 to 2 years (18.0%), less than 6 months (16.0%), 3 to 4 years (12.0%), and 2 to 3 years (11.3%).

As for government countermeasures, respondents suggested minimizing tariffs through negotiations (44.6%), supporting diversification of export markets (13.6%), maximizing the number of duty-free items (13.1%), and applying the same tariff rates as competing countries (9.4%).

Measures that the government should pursue to facilitate smooth tariff negotiations included efforts to eliminate non-tariff barriers (45.3%), lowering interest rates (23.4%), presenting cooperation plans for the shipbuilding industry (12.5%), and expanding imports of U.S. products (8.9%).

Meanwhile, companies projected the average annual KRW-USD exchange rate for this year to be 1,433.2 won. In terms of responses to foreign exchange risk, companies cited export and import price adjustments (22.3%), diversification of export markets (20.8%), strengthening corporate competitiveness (19.8%), diversification of import sources (17.3%), and expanding foreign exchange hedging strategies (10.1%).

Lee Sangho, head of the Economic and Industrial Division at the Federation of Korean Industries, stated, "Despite the temporary agreement between the U.S. and China to lower tariffs, uncertainty regarding tariff policy remains. The government should closely monitor changes in U.S. tariff policy, work to eliminate non-tariff barriers, and develop negotiation strategies to minimize the damage to domestic companies."

This content was produced with the assistance of AI translation services.