S. Korea set to inject $2 billion in emergency aid for tariff-hit car industry

IANS April 6, 2025 235 views

South Korea is responding aggressively to new US automotive tariffs by preparing a massive $2 billion emergency aid package for its car industry. The government will leverage state-run lenders like the Korea Development Bank to provide critical financial support to manufacturers facing potential export challenges. These tariffs could potentially reduce Korea's US car exports by nearly 19%, threatening a sector that represents almost half of its international vehicle sales. The strategic response demonstrates Korea's commitment to protecting its key economic sectors during challenging international trade conditions.

"The financial support will likely amount to around 3 trillion won" - Ministry of Economy and Finance Official
Seoul, April 6: The South Korean government plans to inject 3 trillion won ($2 billion) in emergency aid into the local car industry to cushion the blow from new 25 percent US tariffs, officials said on Sunday.

Key Points

1

- US 25% auto tariffs threaten South Korea's critical car export sector

2

Korea plans comprehensive $2 billion emergency financing strategy

3

KDB to lead targeted support for automotive manufacturers

4

Strategic fund established for future mobility technologies

The new tariffs, enacted last week by U.S. President Donald Trump, are part of a broader protectionist push to reduce trade deficits and strengthen domestic manufacturing, reports Yonhap news agency.

South Korea is among the countries hit hardest, with its car exports to the United States accounting for nearly half of its total car sales overseas.

At a ministerial meeting scheduled for this week, the government will approve the emergency financing plan, which will be carried out through state-run lenders, such as the Korea Development Bank (KDB).

"The financial support will likely amount to around 3 trillion won, though the exact figure hasn't been finalised," said an official from the Ministry of Economy and Finance. "It will be disbursed through KDB's existing loan programs."

In addition, the KDB and other policy lenders will provide up to 248 trillion won this year in broader financial support to help businesses navigate worsening global conditions and restructure industrial sectors.

The government has also confirmed plans to establish a 50 trillion-won strategic fund over the next five years to support the development of future mobility technologies in response to growing economic uncertainty following the start of Trump's second term.

The Financial Services Commission will also meet with top executives from major commercial banks and state-run lenders on Monday, encouraging them to participate in the coordinated effort to support the struggling auto sector.

Cars are South Korea's top export item to the United States. In 2024, auto exports to the U.S. reached $34.7 billion, accounting for nearly half of all South Korean vehicle exports.

Analysts warn that the new tariffs will significantly impact the country's economy by driving up the prices of Korean cars in the U.S. market.

A report published by the IBK Economic Research Institute estimated that South Korea's car exports to the U.S. will decrease by 18.6 percent once Washington imposes 25 percent tariffs on car imports.

Reader Comments

J
James K.
This is a smart move by the government! The auto industry employs so many people here. We can't let these tariffs destroy our economy. 🇰🇷💪
S
Soo-Min P.
While I understand the need to support the industry, I worry this is just a temporary fix. Shouldn't we be investing more in diversifying our exports instead of doubling down on cars?
H
Hae-Won L.
My husband works at Hyundai and we've been so stressed about these tariffs. This news gives us some hope that the government won't let workers suffer because of political decisions.
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David C.
Interesting to see how this plays out. The 50 trillion-won future mobility fund sounds promising. Maybe this crisis will push us to innovate faster in electric and autonomous vehicles.
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Min-Ji Y.
I just bought a Kia last month - hope this means my warranty and service won't be affected! The article didn't mention anything about consumer protections though...
T
Tae-Sung K.
The 18.6% export drop prediction is scary. That's nearly 1/5 of our car exports gone. The government needs to act fast before layoffs start happening.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Tags:
US-Korea Trade Donald Trump Automotive Industry Economic Policy Korea Development Bank Trade Tariffs
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