South Korea established a collection of crisis relief tools to minimize the effects from U.S. President Donald Trump's new auto industry tariffs. South Korean automakers face pending threats to their major U.S. export sector while South Korea officials announced this decision on Wednesday.

Advertisment

The support package elevates financial aid for auto businesses and raises policy financing totals from 13 trillion won to 15 trillion won (USD 10.18 billion) before ending in 2025. The government decided to provide reduced automobile purchase taxation through lowering the current 5% rate to 3.5% until June 2025. From June to December of this year electric vehicle subsidies will undergo an increase that doubles price reduction support to 30%-80%.

South Korean automakers face major business challenges because of their minimal U.S. local manufacturing volume according to government statements about the expected severe harm to car producers and automotive component suppliers.

Also Read | Kim Soo Hyun’s footage completely removed from South Korean show amid dating scandal

Advertisment

South Korea's government made a commitment to actively conduct U.S. negotiations in order to obtain fair treatment similar to what other allies receive. Officials will work positively to assist automobile manufacturers when they expand into rapidly growing markets throughout Africa and Asia and Latin America.

Manufacturers in the automotive sector received encouraging news from the government aid but expressed doubt about its adequacy for the industry. An industry informant highlighted the necessity of additional tax support discussions to enhance domestic consumer interest.

Automobile exports from South Korea to the United States during 2024 reached a total of USD 34.7 billion which corresponded to 50% of its worldwide automobile export volume. Hyundai Motor, a major player in the South Korean auto industry, announced last week its intention to maintain current sticker prices for its model lineup for the next two months to alleviate customer concerns regarding tariff-related price hikes. This follows the company's recent USD 21 billion investment in the U.S.

Advertisment

Analysts suggest that President Trump's aggressive tariff approach may be a tactic to leverage concessions in trade negotiations. They also noted that the tariffs are likely to increase input costs for vehicles in general, with the electric vehicle supply chain potentially facing a greater impact due to its reliance on Chinese parts.