Seoul weighs tariff strategy, considers relief for auto sector

Korea is reviewing options to tackle U.S. President Trump's major tariffs on America's trading partners.

Separately, it's preparing a financial support package worth 2-billion dollars to help industries hit by the trade war.

Our Moon Hye-ryeon has the details.

As the United States imposes a 25 percent reciprocal tariff on South Korean goods, Seoul is cautiously preparing its negotiation strategy -including plans to dispatch its top trade official to Washington.

The government is reportedly analyzing broader trade dynamics, as the U.S. appears to have based the new tariffs on trade surpluses rather than a detailed policy review.

With countries like Vietnam also facing steep duties, companies such as Samsung -which produces more than half its global smartphone supply there -may be forced to restructure their supply chains.

Seoul is closely watching how other major players, including Japan and the European Union, approach negotiations with Washington, all while seeking to reduce its trade surplus with the U.S. without undermining the foundations of its export-driven economy.

In response to what officials are calling a "tariff shock," the South Korean government is preparing a financial support package worth nearly 3 trillion Korean won -or over 2 billion U.S. dollars -aimed at stabilizing key industries hit hardest, including automobiles and auto parts.

The package, expected to roll out within the next week, will be delivered through state-run policy finance institutions such as the Korea Development Bank.

Automobiles remain South Korea's top export to the United States, with nearly half of the country's total auto shipments headed there last year.

Auto parts exports to the U.S. also hit a record high, underscoring the critical role of these sectors in bilateral trade.

Amid these developments, domestic banks are rapidly tightening credit risk controls and reassessing their loan portfolios.

In a notable example, one bank recently reclassified the secondary battery industry as high-risk -a move that signals a broader shift in risk assessment across the financial sector.

With U.S. tariff policies continuing to evolve and uncertainty deepening, South Korean authorities and financial institutions are bracing for prolonged economic turbulence.

Moon Hye-ryeon, Arirang News.