The ongoing U.S.-China trade war is benefiting Korea's exports to the United States, according to a report released by the Institute for International Trade of the Korea International Trade Association on June 13.
The report says South Korean and Chinese goods imports respectively rose 20.5 percent and fell 24.7 percent on year in the first quarter of this year in the U.S. markets covering Chinese goods subject to import restrictions.
The institute said that the U.S. tariffs imposed on US$250 billion of Chinese goods on four different occasions since July 2018 are helping South Korea increase its exports to the United States.
In those markets, the overall market share of Chinese goods fell from 16.13 percent in the first half of last year to 12.53 percent in the first quarter of this year. During the same period, that of South Korean goods rose from 3.38 percent to 4.06 percent. Likewise, Taiwanese and Vietnamese goods imports in the markets increased 29.1 percent and 28.3 percent in the first quarter of this year, respectively.
The United States has decided to impose tariffs on 6,842 Chinese export items so far. In addition, 3,805 items are likely to be subject to tariffs in the near future.
The change in market share is especially conspicuous in those market segments covering automobiles, machinery, plastic and rubber products, electrical and electronic products, and petroleum-based products. This is because those items account for more than half of the restricted items.
In the entire U.S. market, South Korean products’ share rose from 2.87 percent in the first half of 2018 to 3.33 percent in the first quarter of 2019. Meanwhile, Chinese products’ share fell from 20.51 percent to 18.01 percent.
During the period, South Korea’s exports to China decreased. Specifically, in the Chinese markets that cover U.S. goods under Chinese import restrictions, U.S., Vietnamese, and South Korean goods imports respectively fell 36.9 percent, 20.2 percent, and 5.9 percent in the first quarter this year. The decline in South Korea’s exports to China is because the Chinese economic slowdown and the decline in local demand for South Korean intermediate goods attributable to sluggish exports from China to the United States more than offset South Korea’s trade diversion effect.