SEOUL (Reuters) -South Korea’s factory output fell in January, while corporate investment also dropped, government data showed on Tuesday, in another sign of growing uncertainty over U.S. tariffs and their ripple effects across the global supply chain.
Industrial output fell 2.3% over the month on a seasonally adjusted basis, after an increase of 3.9% in the previous month. That compared with a fall of 3.1% forecast in a Reuters poll.
Among products, electronic components, such as display panels, fell 8.1%, and machinery for semiconductor assembly dropped 7.7%.
Pressure on the economy is growing amid increasing uncertainty at home and overseas including U.S. tariffs, the finance ministry said after the data release. It also cited unfavourable base comparison and fewer working days for the weak January outcome.
U.S. President Donald Trump said on Monday that 25% tariffs on Canada and Mexico will go into effect on Tuesday with reciprocal tariffs starting April 2.
As a major global exporter and top trading partner with the United States, South Korea has viewed Trump’s measures with increasing concern.
While the U.S.-Korea Free Trade Agreement (FTA) allows most goods to be traded without tariffs, Trump has announced plans to impose a 25% tariff on steel and aluminium globally, including on South Korea.
In February, South Korea’s exports barely grew, as shipments of semiconductors snapped 15 months of gains on a decline in memory-chip prices, data showed on Saturday.
The all-industry production index fell 2.7% in January, as output in the services sector also declined 0.9%.
Facility investment dropped 14.2% on weaker imports of machinery for semiconductor production and transport equipments, according to Statistics Korea, while retail sales fell 0.6%.
(Reporting by Jihoon Lee; Editing by Chris Reese and Shri Navaratnam)
