FILE PHOTO" A truck unloads a shipping container at Pyeongtaek port in Pyeongtaek, South Korea, July 8, 2025. REUTERS/Kim Hong-Ji/File photo

By Jihoon Lee

SEOUL (Reuters) -South Korea's export growth in August slowed more than markets had anticipated, as tariffs sent U.S.-bound shipments tumbling to their sharpest decline since the COVID-19 pandemic, trade data showed on Monday.

Exports from Asia's fourth-largest economy, an early bellwether for global trade, rose 1.3% from the same month last year to $58.40 billion, weaker than a 3.0% increase tipped in a Reuters poll of economists.

It was the third consecutive month of year-on-year increases, led by robust chip sales amid a boom in artificial intelligence technologies, but much slower than July's growth of 5.8% and the weakest in the streak.

In late July, Seoul reached a trade deal with President Donald Trump, which set U.S. tariffs on imports from the Asian ally at 15%, on par with Japan and the European Union.

The tariff of 15%, lower than a threatened 25% but higher than the baseline 10% that had been in place, came into effect on August 7.

Shipments to the U.S. fell 12.0%, the biggest drop since May 2020, dragged down by automobiles, machinery and steel. But exports of semiconductors and wireless communication devices, currently exempt from tariffs, grew.

"The decline in August was even sharper due to the effect of front-loading before 'reciprocal tariffs' kicked in," Park Sang-hyun, an economist at iM Securities, said, referring to Trump's country-specific tariffs.

"Although it is inevitable that U.S. exports will continue to decline, the pace is unlikely to worsen further," Park said, adding that the 15% tariff does not put Korean products at a huge disadvantage against rivals.

A separate survey for August released on Monday showed South Korea's factory activity weakened for the seventh consecutive month, as export orders fell at the steepest pace since April, when Trump first introduced 10% baseline tariffs on all imports.

The government will prepare policy measures in early September to help tariff-hit exporters, such as steps to boost domestic demand, diversify markets and improve competitiveness, Industry Minister Kim Jung-kwan said after the data release.

The Bank of Korea warned last week of a "significant" economic shock from higher U.S. tariffs even after a trade deal, citing comparably steeper tariff hikes versus rival exporters and high exposure to product-specific duties.

Exports to China also fell 2.9% in August, but those to Southeast Asia jumped 11.9%. Shipments to Taiwan surged 39.3% on strong chip demand.

Total exports of semiconductors rose 27.1%, while auto and ship exports rose 8.6% and 11.8%, respectively. Petroleum and petrochemical products, however, dropped 4.7% and 18.7% each on price declines.

Imports fell 4.0% in August to $51.86 billion, after rising 0.7% in July. They were also weaker than a 0.1% fall expected by economists.

The monthly trade balance stood at a surplus of $6.51 billion, narrower than the previous month's $6.61 billion.

(Reporting by Jihoon Lee; Editing by Kim Coghill and Shri Navaratnam)