A large economic package totaling $20.5 billion has been initiated by South Korea to aid car production and pharmaceutical production as a direct countermeasure to the new US tariffs. South Korea is very much threatened by the new US levies made under Trump's regime because the export sector is a central component of their economy. Exports during the first 20 days of May declined 2.4% from the corresponding period of last year and shipments to the U.S. fell more than 14%.
The government is attempting to assist those businesses which have borne the worst brunt of the crisis. Special assistance is being given to the semiconductor and biopharmaceutical sectors which are major export segments. Pharma manufacturers have been cautious in launching new initiatives in the U.S., due to increased risks and shifting trade dynamics. This assistance is aimed at preventing these industries from deteriorating due to the added threats of U.S. trade regulations.
Additional assistance is also being sent to the automobile sector. South Korea exported $43 billion in vehicles and auto parts to the U.S. over the past year, so it's a very significant export market. The imposition of the new 25% tariffs on these items has resulted in actual hardship. The government has established a $2 billion emergency package that is intended to assist carmakers. Consequently, companies who are interested in electric cars are awarded cost savings, tax reduction and special assistance.
South Korean representatives are also negotiating terms of the trade conflict with U.S. trade allies in an effort to come to some kind of agreement. Government officials from both nations are complaining that the government cannot levy future tariffs on steel and aluminum, as there is now a free trade agreement in effect. The United States has been reminded by South Korea of the enormous contribution made by South Korean companies in the form of factories and employment in the U.S.
The swift and stern response shows how much the South Korean government cares about the well-being of the economy. Due to the tariffs, South Korea is providing financial assistance and new avenues for trade negotiations to mitigate the risks for its companies.
- Reported by Rimi Majumder
Intern at the Korean Academy
Korean news analysis and reporting
