Seoul: The South Korean government has announced plans to allocate 3 trillion won (approximately USD 2 billion) in emergency aid to its domestic car industry, which has been impacted by the recent imposition of a 25 percent tariff by the United States. This announcement was made by officials on Sunday, according to the country’s news agency, Yonhap.
According to Qatar News Agency, these tariffs were introduced last week as part of US President Donald Trump’s protectionist agenda aimed at reducing trade deficits and bolstering domestic manufacturing. South Korea, whose car exports to the United States constitute nearly half of its total overseas car sales, stands among the most affected nations.
The South Korean government is set to approve the emergency financing plan in a ministerial meeting scheduled for this week. The aid will be distributed through state-run financial institutions, including the Korea Development Bank (KDB). An official from the Ministry of Economy and Finance mentioned that while the financial support is projected to be around 3 trillion won, the exact figure is yet to be finalized. The funds will be disbursed via existing loan programs offered by KDB. Additionally, KDB and other policy lenders are expected to provide up to 248 trillion won in broader financial support this year to help businesses adapt to global economic challenges and undertake industrial restructuring.
In response to the economic uncertainty following the start of Trump’s second term, the South Korean government has also unveiled plans to establish a 50 trillion-won strategic fund over the next five years. This fund aims to support the development of future mobility technologies.
The Financial Services Commission is scheduled to meet with senior executives from major commercial banks and state-run lenders on Monday. The meeting will focus on encouraging these financial institutions to participate in the coordinated efforts to support the struggling auto sector. South Korea’s car exports to the United States reached USD 34.7 billion in 2024, making automobiles the country’s top export item to the US and accounting for nearly half of all South Korean vehicle exports.