Impacts of the U.S.-China Trade Dispute on Korea’s Exports: Tariff Shocks, Trade Diversion, and GVC Channels

February 28, 2026Korea Trade Review

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Key Points

The research aims to understand how tariff measures from the U.S.-China trade dispute impact Korea's exports through various channels.
Utilized the 2018–2019 tariff shocks as a natural experiment to assess changes in export shares by product category.
Combined input-output based exposure assessments with macroeconomic elasticity estimates to derive net effects on Korean exports.
Conducted scenario analysis to determine the impact of tariff shocks on different sectors, especially in intermediate goods.
Tariff shocks caused a decrease in demand for Korean intermediate and capital goods in China due to reduced Chinese exports to the U.S.
Simultaneous effects of trade diversion to the U.S. market and reduced demand from China were observed, suggesting a strong likelihood of net export decline for Korea.
The materials and components sector showed heightened sensitivity to GVC shocks, with potential limitations on the direct effects based on destination structure.

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This analysis identifies the effects of tariff shocks on Korea's exports, highlighting trade diversion and macroeconomic implications.

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Byungki Mun (2026) studied this question.

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