Auto exports to the United States last month fell 36% from a year earlier. According to the Oct. trade data release that the Ministry of Trade and Industry (MOTI) released on the 1st, last month's auto exports to the United States totaled $1.57 billion, down 35.6% from a year earlier. Auto parts exports also fell 28.7% from a year earlier to $370 million.
A Ministry of Trade and Industry (MOTI) official said, "With the United States imposing a tariff and the number of working days reduced by the Chuseok holiday, exports of most items, including automobiles, were sluggish."
Total exports to the United States last month were $8.71 billion, down 16.2% from a year earlier. Since the United States imposed a reciprocal tariff, the decline in exports to the United States has been the largest. Even historically, after COVID-19 spread and the United States went into a "shutdown," the decline was the largest in 5 years and 5 months since May 2020 (-29.4%).
Beyond automobiles, general machinery exports also fell 33.2% from a year earlier.
Still, demand from U.S. big tech corporations for artificial intelligence (AI) development lifted semiconductor exports 70.8% from a year earlier to $970 million, narrowing the overall export decline.
Attention is on whether exports to the United States will show a recovery in November exports. Korea and the United States agreed to launch bilateral trade talks at a summit between President Lee Jae-myung and President Donald Trump on the sidelines of the Asia-Pacific Economic Cooperation (APEC) meeting.
Of the $350 billion investment package for the United States, $200 billion will be invested under government leadership with an annual cap of $20 billion, and the tariff on Korean-made automobiles and auto parts will be lowered from 25% to 15%.
The timing of the tariff cut depends on when the bill is submitted to the National Assembly. Presidential Chief of Staff for Policy Kim Yong-beom said, "It was agreed between the two countries to retroactively lower the tariff to the first day of the month in which the relevant bill is submitted to the National Assembly."
Kim added, "We will submit the bill within November," and said, "Once it is submitted, we will notify the United States, and if it is confirmed between the two countries, the timing of the tariff cut will be set retroactively to the first day of that month (Nov. 1)." Kim then said, "If the submission is delayed, it may be pushed back by about a month, but we will try to submit it in November if possible."
For Korean automobile corporations, which in recent months have faced unfavorable tariffs compared to competitor countries Japan and the European Union (EU), this is expected to be a boon.
Hyundai Motor now expects up to 4 trillion won in annual expense savings as tariff negotiations were concluded on the occasion of the Korea-U.S. summit. According to the industry, if item tariffs are lowered from 25% to 15% starting in November, Hyundai Motor and Kia are expected to reduce operating losses by about 2.4 trillion won and 2 trillion won, respectively.