US export growth in Korean food encounters tariff impediment

The continuous growth in US-bound agricultural shipments, which had been on an upward trajectory since May 2023, came to an end in July. This setback, however, did not significantly impact the year-to-date agricultural food exports to the United States, which still rose by 21.3% to $1.07 billion.

One company that has been heavily reliant on shipments from Korea is Samyang Foods, the maker of Buldak noodles. An official from the company revealed that they concentrated much of their exports before June to secure inventory in the US market. In contrast, Nongshim, another major Korean food company, manufactures locally, which may have shielded it from some of the challenges faced by Samyang.

The decline in exports was not limited to agricultural foods. Sauce shipments dropped by 7.2% to $7 million, and snack exports fell even more sharply, decreasing by 25.9% to $20 million. Instant noodle exports, or ramyeon, also saw a significant drop of 17.8% in July, totalling $14 million.

Industry insiders attribute the slowdown in Korean food exports to front-loaded shipments, while others point to the growing burden of tariffs as a key factor dampening retail performance. The softening US consumer sentiment, driven by persistent inflation, is further weighing on the outlook.

In July, South Korea's exports of agricultural goods to the United States fell 6.7% compared to the previous year, totalling $139 million. This decline is particularly concerning given that under the second Trump administration, South Korea's food export performance to the United States is showing signs of strain.

A major Korean food company official stated that after the initial 10% general tariff, some retail prices rose, with higher tariffs now in place, further increases are inevitable. This could potentially reduce consumer demand and result in fewer orders from US distributors.

The growth rate of year-to-date agricultural food exports eased from 27% recorded through June. Despite this, the first half of the year saw the instant noodle category surge 40.8% compared to the same period last year. However, ginseng products posted a double-digit loss of 13.4% in July.

The sluggish second-quarter growth for major food players such as CJ CheilJedang and Nongshim is a concern for the Seoul-based industry analysts. They mention that Korean companies operating in the US are not immune to the shift causing the slowdown.

In conclusion, the decline in South Korea's food exports to the US, coupled with the rising tariffs and inflation, is posing significant challenges for the Korean food industry. The outlook for the second half of the year remains uncertain, with many factors contributing to the current situation.