Korea set to inject $2 bil. in emergency aid for tariff-hit car industry
Cars are parked ready to be exported at a port in Pyeongtaek, Gyeonggi Province, Thursday. Yonhap
The Korean government plans to inject 3 trillion won ($2 billion) in emergency aid into the local car industry to cushion the blow from new 25 percent U.S. tariffs, officials said Sunday.
The new tariffs, enacted last week by U.S. President Donald Trump, are part of a broader protectionist push to reduce trade deficits and strengthen domestic manufacturing.
Korea is among the countries hit hardest, with its car exports to the United States accounting for nearly half of its total car sales overseas.
At a ministerial meeting scheduled for this week, the government will approve the emergency financing plan, which will be carried out through state-run lenders, such as the Korea Development Bank (KDB).
"The financial support will likely amount to around 3 trillion won, though the exact figure hasn't been finalized," said an official from the Ministry of Economy and Finance. "It will be disbursed through KDB's existing loan programs."
In addition, the KDB and other policy lenders will provide up to 248 trillion won this year in broader financial support to help businesses navigate worsening global conditions and restructure industrial sectors.
The government has also confirmed plans to establish a 50 trillion-won strategic fund over the next five years to support the development of future mobility technologies in response to growing economic uncertainty following the start of Trump's second term.
The Financial Services Commission will also meet with top executives from major commercial banks and state-run lenders on Monday, encouraging them to participate in the coordinated effort to support the struggling auto sector.
Cars are Korea's top export item to the United States. In 2024, auto exports to the U.S. reached $34.7 billion, accounting for nearly half of all Korean vehicle exports.
Analysts warn that the new tariffs will significantly impact the country's economy by driving up the prices of Korean cars in the U.S. market.
A report published by the IBK Economic Research Institute estimated that Korea's car exports to the U.S. will decrease by 18.6 percent once Washington imposes 25 percent tariffs on car imports. (Yonhap)