Shelly Banjo is a Bloomberg Gadfly columnist covering industrial companies and conglomerates. She previously was a reporter at Quartz and the Wall Street Journal.

Overshadowed by North Korea's sixth nuclear missile test Sunday were reports President Donald Trump could terminate the U.S.-South Korea free-trade agreement as soon as this week. Talk about bad timing.

With tensions rising on the Korean peninsula, Trump's brash trade talk will probably take a backseat to the more pressing problem of preventing nuclear war. But even without North Korea's recent escalation, it seems unlikely America will totally quash the 2012 trade pact, known as KORUS.

America is South Korea's second-largest trading partner after China, while South Korea holds a spot much farther down the U.S. list. But America doesn't actually have the capability or know-how to manufacture a whole lot of everyday things it needs, such as cell phones and computers.

So even though South Korea represents the U.S.'s seventh-largest trading partner, the North Asian nation sells a lot more than it buys: America's goods trade gap with South Korea was $27.7 billion in 2016, more than double the $11.9 billion deficit in 2007.

Buddy System
South Korea represents America's seventh-largest trade partner
Source: Bloomberg
Note: Based on trade of goods

That means even if Trump wanted to rip up KORUS, there's little chance the river of stuff flowing into the U.S. would stop. Rather, dissolving the pact would drive up consumer prices of smartphones and SUVs.

From a corporate perspective, fewer than 1 percent of South Korean companies depend on America for a meaningful amount of sales. Out of 2,750 publicly traded businesses, just 66 get more than a fifth of their revenue from the Americas, according to an analysis of data compiled by Bloomberg.  

Those most dependent include Doosan Bobcat Inc., a unit of South Korea's biggest construction equipment maker, and Hansae Yes24 Holdings Co., which supplies clothing to Wal-Mart Stores Inc. They each relied on North America for around 60 percent of sales last year.

American Pie
South Korean companies that derive the highest percentage of annual revenue from the Americas
Source: Bloomberg
Note: Data reflects 84 South Korean companies with more than $1 billion in annual sales; Americas includes both North and South America because of the way many companies break out results.

Tech giants like Samsung Electronics Co. and SK Hynix Inc., along with automakers Hyundai Motor Co. and Kia Motors Corp., derive about one-third of their annual revenue from the region. 

Still, the impact wouldn't be insignificant.

America is Samsung's biggest market. And Hyundai and Kia have already taken a hit from a U.S. auto industry slump unrelated to trade matters. Although half the vehicles Hyundai sells are manufactured in the U.S., cars still represent the largest category of America's imported goods.

The auto trade with Korea has long been a sticking point with America since an 8 percent passenger tariff on American cars helped prop up a trade imbalance. But since the U.S.-Korea trade pact came into force in 2012, Korea's phase out of imported vehicle taxes helped boost U.S. auto exports by 280 percent to $1.6 billion in 2016. North American car exports to Korea increased 20 times faster than global auto exports during the period, according to the Office of the U.S. Trade Representative.

We saw the U.S.'s proposed border adjustment tax fail spectacularly as lawmakers realized a penalty on corporations that imported goods wouldn't entice U.S. manufacturing as much as it would increase prices for voters, er, consumers. There's little reason to believe scrapping the trade pact with South Korea would be any different.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. The U.S. exports more services than goods, so when services are included, South Korea is America's sixth-largest trade partner.

  2. Due to the way companies group their data, it's difficult to break out North America from the rest of the Americas region. Only 12 firms break out operating income from the Americas. 

  3. Among companies with more than $1 billion in annual revenue.

To contact the author of this story:
Shelly Banjo in Hong Kong at

To contact the editor responsible for this story:
Katrina Nicholas at