Observations suggest that the export landscape for South Korea will drastically change due to the mutual tariff measures taken by the United States Trump administration. This is because the United States imposes higher tariff rates on our core export region, ASEAN (Association of Southeast Asian Nations), compared to South Korea, making it difficult to maintain the value chain of "Korean-produced intermediate goods → ASEAN exports and product completion → Exports to demand countries such as the U.S."
In the export industry, there have been mixed expectations that ASEAN will become a new export pathway as exports to ASEAN outpaced exports to China for the first time this year amid trade uncertainties. However, as the U.S. announced country-specific mutual tariffs, optimism quickly diminished.
According to the Ministry of Trade, Industry and Energy, South Korea's exports to ASEAN have exceeded exports to China for two consecutive months. Exports to the ASEAN region ranked second after the United States. In February, exports to ASEAN were $9.58 billion, exceeding exports to China by $80 million, and in March, exports to ASEAN reached $10.3 billion, outpacing exports to China by $230 million. It is the first time since February 2002 that exports to ASEAN have surpassed those to China on a monthly basis.
At the center of this change is Vietnam. According to the Korea International Trade Association, exports to Vietnam accounted for 50.9% of South Korea's exports to ASEAN from last year to March this year, exceeding half. Since surpassing Japan for the first time in 2022, Vietnam has maintained its position as South Korea's third-largest trading partner.
This is a result of our corporations relocating production bases to Vietnam instead of China to reduce labor costs. In fact, the top three export items to Vietnam last year (totaling $58.3 billion) were intermediate goods: ▲Organic light-emitting diode (OLED) at $10.1 billion, ▲memory at $7.4 billion, and ▲processors and controllers at $6.7 billion.
Kang Seong is a senior researcher at the Korea International Trade Association's New Trade Strategy Division, who noted, "As semiconductor exports to China decline and exports to Vietnam increase significantly, exports to ASEAN surpassed those to China in February and March this year," adding, "This is attributed to the significant presence of our local corporations."
Among South Korean corporations operating in Vietnam, those with a large share of exports to the U.S. are considering strategic adjustments. According to the Korea Trade-Investment Promotion Agency (KOTRA), there are currently 2,602 South Korean companies operating in Vietnam, accounting for 26% of the total 9,930 South Korean companies worldwide. This is more than in China (2,397) or the U.S. (933). Trade authorities estimate that when including individual business operators, the number of South Korean corporations in Vietnam exceeds 9,000.
It has been reported that among these, the dependence on exports to the U.S. is high in the mobile phone, electronics, and textile industries. Major corporations in mobile phones and electronics, Samsung Electronics and LG Electronics, are in a state of emergency. Samsung Electronics, Samsung Electro-Mechanics, Samsung Display, and Samsung SDI have production facilities in Bac Ninh and Thai Nguyen in northern Vietnam. Moreover, it is known that more than 50% of Samsung Electronics' smartphones are produced in Vietnam. LG Electronics, LG Display, LG Innotek, and LG Chem have production bases in Hai Phong, Vietnam.
A representative from Samsung Electronics stated, "The U.S. mutual tariff measures affect the entire industry; it is not just our issue," and added, "We are continuously discussing internal measures, and it is not a situation where a conclusion can be easily reached."
The clothing industry is also in a state of tension. It has been reported that 90% of the sales of Hansei Industry and SeA Trading's Vietnamese subsidiary come from exports to the U.S. The fashion industry is exploring ways to utilize factories in countries other than Vietnam. An industry insider remarked, "While it was expected that President Trump would impose high tariffs on China, the 46% tariff on Vietnam was an unprecedented measure," adding, "It is an emergency situation where we discuss response measures all day."
Cho Sung-dae, head of the Korea International Trade Association's Trade Research Office, projected, "This high tariff measure will inevitably have a direct impact on exports to Vietnam, leading to a need to adjust production volumes due to a decline in orders from Vietnam, which will in turn reduce South Korea's intermediate goods exports."
The government plans to hold a meeting with corporations that have entered Vietnam soon and to prepare response measures through consultations with the Vietnamese government. A government official stated, "Some corporations operating in Vietnam have a high share of exports to the U.S.," adding, "At the government level, we will closely communicate with the Vietnamese government and corporations."