Synopsis
The South Korean government is preparing to allocate 3 trillion won ($2 billion) in emergency support to the automotive industry in response to new 25 percent tariffs from the U.S. This aid aims to alleviate the impact of these tariffs on the economy, particularly as South Korea relies heavily on car exports to the United States.Key Takeaways
- $2 billion emergency aid for car industry
- 25% tariffs imposed by the U.S.
- South Korea's car exports to the U.S. are crucial
- Financial assistance to be distributed via KDB
- Projected 18.6% drop in car exports to the U.S.
Seoul, April 6 (NationPress) The South Korean government is set to allocate 3 trillion won ($2 billion) in emergency assistance to the domestic automotive sector to mitigate the effects of the recent 25 percent tariffs imposed by the United States, officials announced on Sunday.
The tariffs, introduced last week by U.S. President Donald Trump, are part of a larger protectionist initiative aimed at decreasing trade imbalances and bolstering domestic production, as reported by Yonhap news agency.
South Korea is one of the nations most severely affected, with nearly half of its total automotive sales abroad destined for the United States.
This week, at a ministerial gathering, the government expects to endorse the emergency financial package, which will be administered through state-owned financial institutions like the Korea Development Bank (KDB).
"The financial assistance is projected to be approximately 3 trillion won, although the final amount is still under consideration," stated an official from the Ministry of Economy and Finance. "This will be distributed via KDB's pre-existing loan schemes."
Moreover, the KDB and other policy banks will offer up to 248 trillion won this year in extended financial aid to help businesses adapt to deteriorating global circumstances and revamp industrial sectors.
The government has further revealed intentions to establish a 50 trillion-won strategic fund over the next five years aimed at fostering advancements in future mobility technologies, in light of increasing economic instability following the commencement of Trump's second term.
On Monday, the Financial Services Commission will convene with senior executives from leading commercial banks and state-owned financial institutions, urging them to engage in a unified effort to assist the ailing automotive industry.
Automobiles represent South Korea's principal export to the United States. In 2024, automotive exports to the U.S. reached $34.7 billion, constituting nearly half of all South Korean vehicle exports.
Experts caution that the newly imposed tariffs will considerably affect the national economy by elevating the prices of Korean vehicles in the U.S. market.
A study released by the IBK Economic Research Institute predicts that South Korea's automotive exports to the U.S. will decline by 18.6 percent should Washington implement the 25 percent tariffs on car imports.
