U.S. Tariff Shock: Manufacturing Outlook Turns Downward for Q4

BSI Falls to 74, Staying Below Baseline for 17 Consecutive Quarters
Cosmetics and Pharmaceuticals Plunge After Autos and Steel
KCCI: "Government Support Needed to Buffer External Shocks"

As the impact of U.S. tariffs has once again dampened business sentiment among export companies, the outlook for the manufacturing sector has turned downward.

The Korea Chamber of Commerce and Industry announced on September 28 that the Business Survey Index (BSI) for the fourth quarter of 2025, based on a survey of 2,275 manufacturing companies nationwide, recorded a score of 74.

This figure is down 7 points from the previous quarter and 11 points from the same quarter last year. As a result, the index has remained below the baseline of 100 for 17 consecutive quarters since the third quarter of 2021.

By industry, traditional export sectors such as automobiles (60) and steel (63) showed particularly poor performance. Cosmetics (69) and pharmaceuticals & bio (87), which had been performing well until the second quarter, also saw significant declines. The outlook for cosmetics dropped by 44 points from the previous quarter due to the elimination of the U.S. de minimis exemption for small parcels.

Pharmaceuticals & bio also faced increased uncertainty due to the announcement of high U.S. tariffs. Semiconductors (98) and food (98) performed relatively well. The semiconductor industry was supported by demand for artificial intelligence and data centers, while the food sector benefited from holiday season demand and strong exports of K-food.

By region, negative outlooks prevailed in Daegu (60), Jeonnam (60), Gangwon (65), and Busan (66), all of which remained in the 60-point range. The main reasons cited were tariff burdens on auto parts and textiles in Daegu, and oversupply in the petrochemical complex in Jeonnam.

Kim Hyunsoo, head of the Economic Policy Team at the Korea Chamber of Commerce and Industry, stated, "While export recovery has supported sluggish domestic demand, the recent increase in U.S. tariff burdens is raising concerns about deteriorating business conditions not only for companies exporting to the U.S. but also for their partners." He added, "The government needs to act as a buffer by providing emergency liquidity, easing regulations, and expanding investment incentives."