South Korea’s trade dynamics with the United States are poised for a shift as the nation continues to channel investments into the U.S. market, according to the Korea International Trade Association (KITA). KITA’s report highlights the potential for a gradual narrowing of the record-high trade surpluses due to these investments.
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In 2024, a significant 46.8% of U.S. imports from South Korea comprised intermediate goods, which were primarily shipped for direct investments, as reported by KITA. This strategic economic interaction contributed to South Korea achieving a trade surplus of $55.6 billion with the U.S. in 2024, marking a 25% increase from the previous year, driven largely by a surge in car exports, according to data from the Korea Customs Service.
The discussions between Seoul and Washington have been ongoing since their mid-April agreement to develop a trade package aimed at reducing tariffs by July 8. Recent talks have seen U.S. officials urging South Korea to address the substantial trade imbalance, as reported by local media.
KITA clarified that the growing trade surplus was not a result of unfair trade practices. Instead, $27.7 billion of the $36.9 billion increase over the past three years was attributed to factors such as the substitution of Chinese products in U.S. supply chains, heightened U.S. demand, and structural shifts in U.S. imports.
