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April 17, 2025

Anna Murray 

The Government of South Korea has announced a US$2 billion
emergency support package for the country’s export-driven automotive industry following the United States' decision to impose a 25% tariff on automobile imports.

The new tariff, introduced by U.S. President Donald Trump, is expected to significantly impact South Korea’s auto exports, which are projected to exceed US$42.9 billion in 2024. In response, South Korea is deploying a set of industrial safety net measures aimed at protecting jobs, stabilizing manufacturers, and strengthening long-term competitiveness.

Key measures include:

• Expanded Policy Financing: Support for the industry will
  increase from 13 trillion won to 15 trillion won (approximately US$10.2 billion).
• Temporary Tax Cut: A reduced car purchase tax, lowered from 5% to 3.5%, will be in effect through June 2025.
• Enhanced EV Subsidies: Electric vehicle subsidies will now cover 30% to 80% of vehicle costs, up from the previous 20% to 40%, and will be extended through the end of 2025.
• Export Market Diversification: Strategic efforts will be
  intensified to tap into new markets across the Global South.

In addition, the government will inject an extra 2 trillion won
(approximately US$1.34 billion) into its low-interest financing program to support automakers in adapting to rapidly evolving global trade
conditions.

“These measures reflect our commitment to safeguarding a pillar of the Korean economy,” a government spokesperson said. “We will continue to work closely with industry partners to weather this challenging
environment and pursue long-term growth opportunities.”