Seoul, South Korea—In response to new U.S. tariffs on vehicle imports, South Korea announced on Sunday a substantial financial support package for its automotive industry. The government plans to inject 3 trillion won (approximately $2 billion) to help offset the impact on car manufacturers and parts suppliers.
The emergency funding, which will be reviewed at a ministerial meeting this week, is set to be administered through state-run lenders like the Korea Development Bank (KDB). An official from the Ministry of Economy and Finance stated, “The financial support will likely amount to around 3 trillion won, though the exact figure hasn’t been finalized. It will be disbursed through KDB’s existing loan programs.”
The U.S. imposed a 25 percent tariff on all car imports starting Thursday, a move that poses a significant challenge for South Korea. Car exports to the U.S. represent nearly half of South Korea’s overseas vehicle sales. According to a report by the IBK Economic Research Institute, these tariffs could reduce South Korean car exports to the U.S. by 18.6 percent.
Adding to the concerns, similar tariffs on car parts are expected to be implemented by May 3. The South Korean automotive industry has urged the government to support local auto parts makers, many of which supply major automakers like Hyundai and Kia. These suppliers exported components worth $8.22 billion in 2024, according to data from the Korea Auto Industries Cooperative Association.
In light of the escalating trade tensions, South Korean Prime Minister Han Duck-soo emphasized the need for decisive action. “As the global tariff war is becoming a reality, the government should pour out all of its capabilities to overcome a trade crisis,” Han stated during an emergency meeting focused on economic security strategy.
The U.S. tariffs come as part of a broader initiative introduced on Thursday, which includes “reciprocal tariffs” on all trading partners, affecting various industries and economies worldwide.
The South Korean government’s swift response highlights its commitment to supporting one of the nation’s most vital industries and mitigating the potential economic fallout from international trade disputes.
