Kim Jeong-gwan, Minister of Trade, Industry and Energy, has focused on reducing external uncertainties over the past year, responding to U.S. tariff pressures and the energy supply crisis caused by the Middle East conflict. This effort coincided with a boom in artificial intelligence (AI) semiconductors, leading to record exports.
According to relevant ministries on July 21, Minister Kim took the lead in U.S.-Korea tariff negotiations shortly after taking office last year. During this process, he held several face-to-face and virtual meetings with his counterpart, U.S. Secretary of Commerce Gina Raimondo. A notable moment in the negotiations occurred when Secretary Raimondo traveled from Washington, D.C., to New York and then to Scotland, before returning to the U.S., marking a pivotal point in the last-minute talks.
As a result of the negotiations, the U.S. agreed to lower reciprocal tariffs applicable to South Korea and reduced the Section 232 tariffs on automobiles and parts to 15%. The agreement also ensured that South Korea would not face unfavorable treatment compared to major competitors regarding future semiconductor tariffs. This significantly alleviated uncertainties for South Korean exporters.
With the reduction of tariff uncertainties and the AI semiconductor boom, exports have reached new heights. Last month, South Korea's monthly export figures surpassed $100 billion for the first time, with first-half export performance nearing $50 billion. If the current trend continues, annual exports are projected to exceed $1 trillion for the first time.
In response to the energy crisis stemming from the Middle East conflict, the government has managed to maintain relative stability. In light of the U.S.-Iran tensions and the blockade of the Strait of Hormuz, efforts have focused on securing alternative crude oil supplies. The government introduced a strategic oil swap to supply its reserves first when private companies confirm alternative oil shipments, and implemented a maximum price system for petroleum products to stabilize supply and demand.
The M.AX initiative, touted as a future growth driver for South Korea, is expanding beyond its initial participation phase into investment and commercialization. Launched in September last year by the Ministry of Trade, Industry and Energy in collaboration with over 1,000 companies, universities, and research institutions, the M.AX Alliance now includes more than 1,300 participants. This month, the Ministry and the Financial Services Commission also initiated the 'M.AX Frontier Project.'
However, addressing export concentration remains a challenge. With semiconductors accounting for nearly 40% of total exports, any downturn in AI investment or memory market conditions could destabilize overall export performance.
Connecting the $350 billion strategic investment in the U.S. to actual business operations is expected to influence the second-year results. It is crucial to ensure that the first investment projects secure commercial viability and the potential for principal and interest recovery, leading to domestic companies winning contracts and entering supply chains. Responding to additional U.S. tariffs and non-tariff barriers also remains a task ahead.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.