This year was supposed to make K-pop great again after a slowdown in 2024 — marked by falling album sales and shrinking profits — as the nation’s biggest acts, such as BTS and Blackpink, are poised to make long-awaited returns.

Sure, Donald Trump’s self-proclaimed “Liberation Day” tariffs were worrisome, but it’s not like the White House can slap duties on songs or dance moves, right?

After all, there’s no way that the K-pop industry would take a hit like traditional heavyweights such as, say, SK hynix or Hyundai Motor… right?


Well, not so fast. If the recent wave of red lights that flickered across K-pop stock tickers are anything to go by, the market appears to be painting a more complicated picture.

Tariff-proof?

By late March and early April, analysts had been optimistic about K-pop stocks’ outlook this year, especially for its biggest cap HYBE — and quite reasonably so.

There appeared to be two key factors working in the industry’s favor: Lower exposure to U.S. tariff threats compared to other sectors and a potential reopening of China to Korean cultural exports.

Many analysts described the entertainment industry, along with defense and shipbuilding, as “windless,” or “safe zones,” suggesting that the sector was likely to remain relatively unaffected from looming tariff uncertainty and rising protectionism.

However, on “Black Monday,” April 7 — when the benchmark Kospi lost 5.57 percent amid fears of a potential economic slowdown and China’s retaliatory tariffs against the United States — HYBE lost 5.89 percent, underperforming the benchmark.

On the secondary Kosdaq index, SM Entertainment fell 5.18 percent, YG Entertainment dropped 6.64 percent, and Dear U, a fan community platform operator, plunged 7.04 percent. The broader Kosdaq market fell 5.25 percent that day.

The drop accelerated on April 9, after several analyst reports projected HYBE to miss expectations and SM and JYP to report weak earnings in the first quarter — leading to further sell-offs.

That day, HYBE fell 6.72 percent, SM 2.62 percent, JYP 4.17 percent, YG 1.86 percent and Dear U 9.17 percent.

China: opportunity or risk?

The most apparent and immediate trigger behind the recent drop was concerns of disappointing first-quarter earnings, which popped the bubble of investor enthusiasm that has been building up on hopes of China fully reopening its market to Korean content, including K-pop concerts.

Beijing has placed an unofficial ban on Korean culture and products in retaliation against Seoul’s deployment of the Terminal High Altitude Area Defense system — or Thaad — in 2016.

After eight long years of restricted activities, however, there have been a series of clear signals suggesting a thawing of the relationship as of late.

In 2023 and 2024, an increasing number of K-pop acts began to hold fan signing events, pop-up stores and other fan events in China.

Most recently, SM Entertainment’s NCT Wish held a press conference in Shanghai on March 30. Girl groups IVE and Twice also had fan-signing events in March and February.

As such, investors have been growing increasingly excited over the prospect of tour stops in mainland China — driving the stock prices of the “Big 4” agencies on an uptrend while other stocks were grappling with tariff woes.

Bursting bubble

However, as the supposedly tariff-proof K-pop stocks fell short of expectations amid the market turmoil last week, some analysts suggest that a sudden bursting of the bubble led to a notable fall in the entertainment sector.

“Expectations that have been preemptively growing over hopes of a full resumption of content trading with China weakened amid escalating U.S.-China tensions,” Daishin Securities analyst Lee Gyeong-min said.

Park So-young, a senior researcher at the Korea International Trade Association, suggested that the overall uncertainty itself could potentially dampen the sentiment in short-term, while also noting that the ongoing tariff war would likely have a relatively limited impact on the entertainment industry compared to other sectors with heavy supply chain reliance on China.

“The U.S.-China tensions have been escalating with retaliatory measures, export controls and mutual restrictions imposed on firms from both countries,” said Park. “Such moves fuel uncertainty, meaning that the general sense of risk might have an [indirect] impact.”

Lim Dae-geun, dean of the College of Culture & Technology at the Hankuk University of Foreign Studies, suggested that K-pop faces a juncture amid the U.S.-China standoff.

“While the U.S.-China tariff war appears to mainly affect the manufacturing sector, its implications on the content industry could also be significant, considering that it functions as a 'sentimental diplomatic asset',” said Lim.

The professor outlined two possible scenarios: First, China might bolster its defensive stance, protecting and promoting its domestic content, while potentially classifying K-pop alongside other foreign content. Or, Korean content can be strategically promoted as an “alternative” to U.S. content, as China could position Korea as “a nonaligned cultural partner” if tension continues to rise.

Either way, the Korean content industry should not remain reliant on the Chinese market to stay sustainable, Lim said.

“I believe that Korea should take this U.S.-China conflict as an opportunity to bolster its multi-market strategy and secure political neutrality and cultural independence.”

Fingers still crossed

Regardless, many analysts remain optimistic about K-pop stocks for the remainder of the year, especially toward the latter half.

“The scope of the decline in share prices of HYBE has been excessive,” noted Hanwha Investment & Securities analyst Park Soo-young, adding that the underwhelming first-quarter performance was due to seasonal issues as most artists had been relatively inactive.

Although the trend is changing, it's typical for K-pop acts to take the first quarter off for major releases after wrapping up a busy winter with a series of award shows.

KB Securities’ Lee Seon-hwa suggested that the U.S.-China tariff tensions could actually make K-pop stocks even more attractive.

“This is the time to focus on the K-pop entertainment sector, as it remains relatively free from U.S. tariff impact and can benefit from an improving relationship with China,” Lee said.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]