In a bid to cushion the impact of US President Donald Trump’s 25% tariffs on South Korean cars, the South Korean government has unveiled a $2 billion emergency support package for its export-focused carmakers.
The move comes after Trump’s announcement of sweeping and punitive tariffs against the US’s biggest trading partners, including South Korea, which are set to take effect.
According to the government, the tariffs could deal a “significant blow” to the country’s auto industry, which exported $42.9 billion worth of vehicles to the US last year.
The aid package includes an expansion of the government’s low-cost financing program for the auto industry by 2 trillion won ($1.34 billion USD) and the establishment of a 1 trillion won support program by Hyundai Motor, South Korea’s largest automaker, in partnership with major financial institutions.
Additionally, companies affected by the tariffs will be eligible for tax deferrals of up to nine months, and the government will operate an electric vehicle subsidy system linked to manufacturers’ discount amounts.
The government has also pledged to take flexible action depending on the level of industry damage and will significantly expand the government matching support ratio from 20-40% to 30-80%.
The tariffs announcement has sent shockwaves through global stock markets, with investors uncertain about whether they are a negotiating tactic or a permanent US position.
Trump has insisted that he will not back down until he has reduced or wiped out US trade deficits, while also signaling that he is ready to negotiate with countries around the world.
In 2024, the US trade deficit with South Korea amounted to just over $66 billion in goods.
The South Korean government’s swift response aims to mitigate the impact of the tariffs and support the country’s vital auto industry.
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