S. Korea announces US$ 1.3 bil. support package for auto industry amid U.S. tariff pressures

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The government has framed out a support package for South Korea's auto industry as it seeks to ease the impact of U.S. tariffs on car imports that kicked in on April 3rd and on car parts to go into effect by May 3rd.

Shin Se-byuck has details.

South Korea will funnel an additional 2 trillion won, or 1-point-3 billion U.S. dollars, into the auto and parts industry amid pressure from the 25 percent tariff imposed by the Trump administration.

"We'll provide 2 trillion won in special policy financing for affected firms and offer low-interest loans and supporting corporate bond issuance worth around 1 trillion won in cooperation with major companies and financial institutions."

The announcement was made during an economy-related ministers' meeting on Wednesday, which addressed responses to shifting trade conditions, including U.S. tariffs and global supply chain changes.

As a result, policy financing for the auto sector will increase from 13 trillion won to 15 trillion won,.. worth around 10-point-1 billion dollars this year.

This came as the U.S. is a key market for Korea's auto industry, accounting for 34-point-7 billion dollars, or nearly half of the country's total auto exports which was worth 70-point-8 billion dollars last year.

With Washington's 25 percent tariffs in place, Korea's auto exports to the U.S. are projected to drop by nearly 19 percent this year.

One expert says the financial package may serve as a short-term buffer, but a different approach is needed for a long-term solution.

"To fundamentally address the issue, the government needs to focus on boosting productivity, developing new technologies, and easing labor-management tensions."

Aside from the aid package, the government will also extend its EV subsidy program, tied to manufacturer discounts to boost domestic sales,.. from the first half of the year through to the end of 2025.

It will also support efforts to tap into new markets, particularly in the Global South, as part of its push to diversify auto exports.

Plans include the early implementation of free trade agreements with countries including the UAE and Ecuador, and the resumption of FTA talks with Mexico to help open up new export destinations.

The government is also accelerating efforts to diversify export markets, focusing on key industries most vulnerable to trade disruptions.

It plans to inject over 40 million U.S. dollars worth of support for overseas operations of small and mid-sized firms, while expanding R&D funding to boost technological competitiveness.

Meanwhile, Finance Minister Choi Sang-mok said the government will soon unveil 6-point-7 billion dollars worth of supplementary budget to boost industrial competitiveness and tackle global trade shifts, calling for swift parliamentary support.

Shin Se-byuck, Arirang News.