Will S. Korea's new export guarantee program help steelmakers facing US tariffs?
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Synopsis
South Korea's government is stepping up to support its steelmakers by introducing a substantial export guarantee program. As tariffs from the U.S. continue to strain the industry, this initiative aims to bolster the supply chain and stabilize the economy. Discover how this program could reshape the future of South Korea’s steel sector.
Key Takeaways
- The South Korean government is introducing a 400 billion won export guarantee program for the steel industry.
- U.S. tariffs on steel have significantly impacted exports, decreasing by over 25 percent.
- The agreement with the U.S. has reduced tariffs from 25 percent to 15 percent.
- The initiative aims to strengthen supply chains and stabilize the economy.
- Continued negotiations with the U.S. for tariff relief are underway.
Seoul, Sep 19 (NationPress) Industry Minister Kim Jung-kwan announced on Friday that the government plans to implement a new export guarantee program valued at approximately 400 billion won (around $290 million) to support the steel industry affected by significant tariffs imposed by the United States.
Kim made these comments during a meeting with prominent executives from major steel companies, including POSCO, held in the southeastern city of Pohang.
The administration of U.S. President Donald Trump initially imposed 25 percent tariffs on steel and aluminum imports, subsequently increasing the rate to 50 percent in June, according to reports from Yonhap news agency.
“The government, steel manufacturers, financial institutions, and policy lenders will collaborate to establish a guaranteed scheme aimed at bolstering the steel industry's supply chains,” said Kim, emphasizing that this initiative will generate an economic impact equivalent to approximately 400 billion won in aid.
The minister also affirmed the government's commitment to ongoing discussions with Washington regarding tariff relief and pledged to introduce further support measures for the industry while intensifying efforts to counter unfair imports.
Additionally, the government will endeavor to alleviate regional economic pressures resulting from the steel sector's challenges, working alongside the National Assembly to develop legislation that supports the industry, Kim noted.
Washington's stringent tariff strategy has adversely impacted domestic steel producers, with exports plummeting by over 25 percent year-on-year in July.
Furthermore, the United States' trade policy is projected to reduce South Korea's economic growth rate by 0.45 percentage points this year, as reported by the central bank.
After extended negotiations, Seoul and Washington reached a pivotal agreement in late July, which stipulates a 15 percent tariff on South Korean products, reduced from an initially proposed 25 percent, in exchange for a $350 billion investment commitment in the U.S.
“The effects of the U.S. tariff policies were minimal in the first half, supported by U.S. companies' inventory buildup, pre-exports from other countries, and shared burdens among businesses. However, the repercussions are expected to become more pronounced in the future,” the Bank of Korea (BOK) stated in its latest biannual monetary policy report.
Point of View
I recognize the critical need for government intervention in supporting our local steel industry amidst external pressures. The proposed export guarantee program is a proactive step to mitigate the adverse effects of U.S. tariffs and stabilize our economy. It reflects a commitment to fostering collaboration between the government, financial institutions, and businesses, ultimately ensuring the resilience of our industries and regional economies.
NationPress
20/09/2025
Frequently Asked Questions
What is the export guarantee program?
The export guarantee program is a financial initiative by the South Korean government to provide support worth approximately 400 billion won ($290 million) to the steel industry affected by U.S. tariffs.
How much have U.S. tariffs affected South Korean steel exports?
U.S. tariffs have led to a more than 25 percent decrease in South Korean steel exports year-on-year as of July.
When was the agreement with Washington reached?
The agreement with Washington was reached in late July, which reduced the tariff on South Korean products to 15 percent from the initially proposed 25 percent.
What is the expected economic impact of U.S. trade policy on South Korea?
The U.S. trade policy is estimated to lower South Korea's economic growth rate by 0.45 percentage points this year.
What measures will the government take to support the steel industry?
The government will work with various stakeholders to create guaranteed schemes, ease regional economic strains, and block unfair imports while continuing negotiations for tariff relief.
