South Korea has introduced a $2 billion emergency support package for its key export-driven car industry, warning that the 25 percent tariffs imposed by U.S. President Donald Trump could severely impact the sector.
The South Korean government stated that the tariffs, targeting automobiles and auto parts—its largest exports to the U.S.—could deal a major blow to the country’s auto industry.
Last week, Trump unveiled a set of aggressive tariffs aimed at the U.S.’s biggest trade partners, with the most drastic measures scheduled to take effect on Wednesday. The tariffs, which include a 25 percent levy on South Korean goods, have sparked concerns about the global economic outlook. South Korea, Asia’s fourth-largest economy, is now scrambling to respond to the situation.
After consulting with the industry, Seoul announced a series of “industrial safety net” measures aimed at addressing the sector’s most urgent needs. The government has also pledged to take flexible actions depending on the extent of the industry’s damage in the coming months.
In 2024, South Korea’s auto-related exports to the U.S. amounted to $42.9 billion. The government’s plan includes expanding its low-interest financing program for the auto industry by 2 trillion won ($1.34 billion USD). Additionally, Hyundai Motor, the largest automaker in South Korea, will establish a 1 trillion won support program for domestic car manufacturers, collaborating with major financial institutions. Companies affected by the tariffs will also be eligible for tax deferrals of up to nine months.
Trump had a conversation with South Korea’s acting president on Tuesday regarding the tariffs. The announcement has sent shockwaves through global stock markets, leaving investors uncertain whether the tariffs are a negotiating tactic or a permanent U.S. policy.
Trump has made it clear he won’t back down until the U.S. trade deficit is significantly reduced or eliminated, while also signaling his willingness to engage in negotiations with countries worldwide.
In 2024, the U.S. trade deficit with South Korea stood at just over $66 billion in goods.
