Structural Analysis of Korea’s Exports to the United States: From Trade Imbalance to Industrial Linkages

Jihyun Kim, Sung Keun Park and Jeong-Hyun Kim
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Jihyun Kim: Korea Institute for Industrial Economics and Trade
Sung Keun Park: Korea Institute for Industrial Economics and Trade
Jeong-Hyun Kim: Korea Institute for Industrial Economics and Trade

No 19, Industrial Economic Review from Korea Institute for Industrial Economics and Trade

Abstract: On April 3, 2025, the administration of United States president Donald Trump announced the imposition of an additional 25 percent tariff on imports from South Korea. This measure, part of a broader protectionist trade strategy, was intended to reduce the US trade deficit and safeguard domestic manufacturing industries. The US government identified South Korea as a holding a major trade surplus vis a vis the US and escalated trade pressure accordingly, but this response stems from a reductive interpretation of the trade imbalance — one that overlooks the underlying structure of bilateral trade between the two nations.

In this study, we conduct a multifaceted structural analysis of Korea’s exports to the United States, focusing particularly on how these exports are deeply integrated into US manufacturing sectors. We also explore the role of Korean foreign direct investment (FDI) in the United States within this interconnected framework, examining its implications for bilateral trade flows. We then identify the implications for strategic policy carried by the empirical evidence that Korea’s trade surplus with the US is underpinned by a mutually complementary industrial structure.

These findings may serve as a foundational rationale in trade negotiations and guide future policy responses to emerging protectionist pressures.

Keywords: trade; international trade; Korea-US trade; trade balance; balance of trade; Trump; tariffs; protect (search for similar items in EconPapers)
JEL-codes: F10 F13 F15 F21 F23 (search for similar items in EconPapers)
Pages: 11
Date: 2025-05-31
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