By Jihoon Lee
SEOUL (Reuters) -South Korea’s exports rose for the second straight month in July, beating market expectations on strong chip demand and shipments being moved forward ahead of higher U.S. tariffs, which are expected to weigh in the second half of the year.
Exports from Asia’s fourth-largest economy, an early bellwether for global trade, rose 5.9% from the same month last year to $60.82 billion, trade data showed on Friday, higher than the 4.3% increase in June and the strongest since December 2024.
The figure beat a median 4.6% rise forecast for July in a Reuters poll of economists, who also noted signs of front-loading shipments ahead of an August 1 deadline for higher U.S. tariffs.
President Donald Trump signed an executive order on Thursday imposing reciprocal tariffs ranging from 10% to 41% on U.S. imports from dozens of countries and foreign locations.
With South Korea, Trump announced a trade deal on Wednesday setting tariffs at 15%, lower than a threatened 25% but higher than the current 10%, which officials, companies and economists cheered for reducing uncertainty over the trade environment.
“Despite the trade deal, demand is still expected to weaken from August as overall tariff rates will increase,” said Lee Jeong-hoon, an economist at Eugene Investment Securities.
“Demand for artificial intelligence, however, will continue to be strong, while that for automobiles is growing in non-U.S. markets.”
A separate business survey showed on Friday South Korea’s factory activity contracted for the sixth straight month in July, as uncertainty over U.S. tariffs weighed on output and orders.
The trade-reliant economy grew at the fastest pace in more than a year in the second quarter, buoyed by rebounding consumer spending and a surge in exports driven by demand for technology.
Exports of semiconductors jumped 39.3% in July, the biggest annual increase since October 2024, while cars rose by a five-month high of 8.8% on robust demand in non-U.S. markets such as Europe. Ship exports surged 107.6%.
By destination, shipments to the U.S. rose 1.4%, after three straight months of declines, as growing technology demand offset the impact of Trump’s tariffs on steel and auto parts. Exports to China fell 3.0%, while those to the European Union rose 8.7%.
Imports rose 0.7% in July to $54.21 billion, compared with a gain of 4.3% in June and 2.0% expected by economists.
The monthly trade balance stood at a surplus of $6.61 billion, narrower than the previous month’s $9.08 billion, which was the biggest since September 2018.
(Reporting by Jihoon Lee; Editing by Himani Sarkar and Jamie Freed)
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