South Korea's March Exports Up on Chip Demand, But Tariff Risks Loom

South Korea's exports likely rose for a second consecutive month in March, boosted by strong semiconductor sales, according to a Reuters poll released on Friday. However, economists warn that momentum could weaken due to escalating US tariffs.

A median forecast of nine economists predicts a 3.5% year-on-year increase in exports for March, following a revised 0.7% rise in February. This comes despite challenging global trade conditions, particularly with China, South Korea's largest trading partner.

The US, under President Donald Trump, has implemented tariffs on various goods from China, steel, and aluminum, with new tariffs on automobiles set to come into effect next week. Trump has also threatened tariffs on semiconductor imports and the potential for reciprocal tariffs against major trading partners.

"With reciprocal tariffs due to be implemented from April, it is difficult to expect a rebound in exports," said Park Sang-hyun, an economist at iM Securities, to Reuters.

Chun Kyu-yeon, an economist at Hana Securities, echoed these concerns, stating that "Downward pressure will be inevitable for the time being as there is a high possibility of South Korea being included in the 'Dirty 15' due to persistent trade imbalances."

The first 20 days of March saw a 4.5% increase in overall exports, driven by an 11.6% jump in semiconductor shipments. While exports to the US and European Union rose, those to China declined.

SK Hynix, the world's second-largest memory chipmaker, revealed on Thursday that some customers had brought forward orders in anticipation of new tariffs on semiconductors. This surge in demand is expected to be short-lived, however, as the full impact of the tariffs takes hold.

Meanwhile, imports are projected to have risen 2.3% in March, a significant acceleration from February's 0.2% increase. The median estimate for the country's trade balance stands at a surplus of $6.06 billion, an expansion from the previous month's $4.15 billion surplus.

South Korea, a leading global exporter, is scheduled to release official trade data for March on April 1.