South Korea announces $2 billion in emergency aid for automakers
InternationalDesk
South Korea on Wednesday announced a $2 billion emergency aid package for its key export-focused automakers. The country has warned that US President Donald Trump's imposition of a 25 percent tariff on the sector could be a "significant blow".The news agency AFP reported from Seoul."Since South Korean automobiles and auto parts are the top export products to the United States, the decision to impose a 25 percent tariff on these products is expected to be a significant blow to our auto industry," a government statement said.
Last week, Trump announced sweeping and punitive tariffs against the United States' largest trading partners. The strictest of which is due to take effect from Wednesday.Trump announced a 25 percent tariff on goods coming from South Korea.Trump has imposed high tariffs on foreign-made cars sold in the United States. That has raised concerns about the global economic outlook and Asia's fourth-largest economy is struggling.
It said that after industry consultations, Seoul decided to launch "a set of industrial protection measures focused on the most urgent needs".The government has also promised "flexible measures depending on the scale of damage to the industry". ’South Korea's total car-related exports to the U.S. last year were $42.9 billion, according to officials.
Under this plan, the government will increase the low-cost financing program for the car industry by USD 2 trillion from its own funds.Hyundai Motor, South Korea's largest automaker, will also establish its $1 trillion own support program for domestic car companies in partnership with major financial institutions.The government also said companies affected by the tariffs would be eligible for a tax moratorium of up to nine months."The importance of the domestic market is being highlighted in responding to the decline in export volumes due to US tariffs and maintaining the country's production base," the government said in a statement."To this end, the government will operate an electric vehicle subsidy system linked to the concession amount to manufacturers from the first half of this year to the end of the year," it said.
The proportion of government support will be significantly increased from the current 20-40 percent to 30-80 percent, the Seoul government said.The tariff announcement has shaken global stock markets, with investors unsure whether this is a negotiating strategy or a permanent U.S. position.
Trump has insisted that he will not back down until the US trade deficit is reduced or even eliminated. At the same time, he is indicating that he is ready to negotiate with different countries of the world.
In 2024, the U.S. trade deficit with South Korea amounted to more than $66 billion.
