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South Korea’s Government Prepares for Impacts of U.S. Tariffs

SEOUL (Reuters) – On Monday, South Korea’s finance minister communicated the government’s proactive approach in formulating support measures for sectors that are particularly vulnerable. This comes in anticipation of U.S. President Donald Trump’s looming implementation of a 25% tariff, set to take effect this week.

Analytical Response to Tariff Implications

Minister Choi Sang-mok has emphasized the critical importance of conducting a thorough analysis of the potential repercussions on the macroeconomy. In the official statement released by the ministry, he highlighted the necessity of introducing support mechanisms targeted precisely at sectors facing immediate challenges.

Overview of the Tariff Announcement

On April 2, 2024, Trump announced sweeping tariffs on all imports into the United States, alongside heightened tariffs on specific countries deemed the "worst offenders." Notably, this includes a significant 25% tariff on imports from South Korea, scheduled to be enforced on Wednesday.

Government Strategies for Key Industries

In response to the tariff announcement, South Korea’s acting President Han Duck-soo expressed the government’s commitment to implement support measures for the automotive industry. Discussions have also been initiated for negotiations with the Trump administration to address these challenges effectively.

Record-High Exports at Risk

In 2024, South Korean exports to the United States reached an astounding $127.8 billion, with automobiles representing the largest share, accounting for 27% of total exports. This puts a significant portion of South Korea’s economy at risk, prompting immediate governmental action.

Policy Review and Strategic Planning

On the same day, Finance Minister Choi Sang-mok and other key policymakers gathered to evaluate a response strategy ahead of the anticipated visit by Trade Minister Cheong In-kyo to the United States. This upcoming visit marks the fifth high-level interaction from the Ministry of Industry, Trade and Energy since President Trump took office. Cheong’s previous visit in March and the multiple visits from Industry Minister Ahn Duk-geun underscore a persistent effort to engage diplomatically.

Diplomatic Engagement with U.S. Leadership

Despite Trump’s invitation to Hyundai Motor Group’s Chairman, Euisun Chung, for a White House event to discuss the automaker’s $21 billion investment in the United States, there has been a notable absence of direct communication between Trump and South Korea’s acting leadership.

Financial Support Initiatives

Separately on Monday, South Korea’s financial regulator urged firms and state institutions to prepare to extend liquidity support for export companies and their contractors who may suffer due to these tariffs. This initiative is essential to maintain stability among businesses facing financial strain.

Market Stability Measures

As the KOSPI stock index has plummeted to a 17-month low amid a global sell-off of riskier assets linked to the U.S. tariffs, the financial regulator announced plans for a significant market stabilization program. This program, estimated at 100 trillion won (approximately $68.08 billion), seeks to reinforce the market’s resilience in turbulent times.

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($1 = 1,468.8000 won)

(Reporting by Jihoon Lee; Editing by Kim Coghill and Gerry Doyle)

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