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Gov't announces $9B emergency fund for tariff-stricken companies

Published: 03 Sep. 2025, 17:28 Updated: 03 Sep. 2025, 18:10

Deputy Prime Minister and Finance Minister Koo Yun-cheol speaks at the Government Complex Seoul in Jongno District, central Seoul, on Sept. 3. [NEWS1]

The government will provide 13.6 trillion won ($9.77 billion) in emergency liquidity support to local companies affected by new U.S. tariffs, while expanding trade insurance coverage to a record 270 trillion won to help exporters maintain cash flow.

Special support measures will also be implemented for steel, aluminum and derivatives firms facing 50 percent tariffs.

The measures were announced Wednesday following a meeting of economy-related ministers and industry competitiveness officials held at the Government Complex Seoul in central Seoul.

“We will do everything we can to minimize the impact of U.S. tariffs on our companies and strengthen the export competitiveness of small businesses and key industries,” said Deputy Prime Minister and Finance Minister Koo Yun-cheol, who presided over the meeting.

Korea’s total exports from January to August rose 0.9 percent on year to $454 billion. However, exports to the United States fell 4.1 percent during the same period, hit by the new tariffs. Although Korea reached a deal with the United States in late July to lower mutual tariffs and auto and auto parts duties to 15 percent, the government noted that the reduced rates still pose a risk to exports.

The aid package is based on three principles: mobilizing all available policy tools, enacting an pan-government response and focusing on company-centered support.

The government will first channel 13.6 trillion won in emergency operating capital through state-run financial institutions. The Korea Development Bank will raise the ceiling of its low-interest loan program for tariff-affected sectors — from 3 billion won to 30 billion won for small businesses, and from 5 billion won to 50 billion won for midsized firms — while reducing interest rates by 0.3 percentage points.

U.S. President Donald Trump delivers remarks on reciprocal tariffs as U.S. Secretary of Commerce Howard Lutnick holds a chart during an event in the Rose Garden entitled ″Make America Wealthy Again″ at the White House in Washington on April 2. [AFP/YONHAP]

The Export-Import Bank of Korea will ease eligibility criteria for its 6 trillion won “crisis response program.” The Korea SMEs and Startups Agency will extend its emergency trade risk response funding to include the copper sector, which has been newly subjected to tariffs, alongside steel, aluminum, automobiles and parts.

Trade insurance support for exporters will be expanded to 270 trillion won, the highest on record. This is up from the 256 trillion won announced in February under the government’s emergency export strategy. Discounts on insurance and guarantee fees of up to 60 percent for small and midsized exporters will be extended through December, and existing guarantee limits will be raised by 50 percent across the board.

Funding for export vouchers, which can be used for tariff response strategies, will be expanded to 420 billion won. The consulting cap will increase from 120 million to 150 million won, while logistics support will rise from 30 million to 60 million won.

Steel, aluminum, derivatives and copper companies subject to 50 percent tariffs will receive an additional 570 billion won in financial support. This includes a newly created 150 billion won interest subsidy program and 200 billion won in low-interest loans from the Korea International Trade Association at preferential rates of 1.5 to 2 percent. A new 400 billion won trade finance product to strengthen steel export supply chains will also be launched.

The government is also aiming to boost domestic demand to absorb export losses in the short term. This includes incentives for EV purchases and refunds for energy-efficient home appliances. For key materials like steel, secondary batteries and machinery, the government will promote the use of domestic steel in infrastructure projects, upgrade outdated regional equipment and expand energy storage system installation.

Containers carrying items for export are piled up at a port in Pyeongtaek, Gyeonggi, on Aug. 17. [NEWS1]

Support for export diversification will also be expanded. The number of companies eligible for government-funded overseas expos, trade missions and Korean Wave-themed fairs will increase from 1,600 to 3,000. Additional financial and marketing support will be offered to growing export sectors such as content, beauty and food.

Korea will also seek to expand free trade agreements with Asean, the Middle East and Latin America, and is considering joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

For mid- to long-term industrial competitiveness, the government will establish a 40 billion won global K-beauty fund and expand the list of simplified FTA-recognized K-food items. The number of overseas K-content centers will be increased from 25 to 30.

Further strategies are expected in the second half of the year, including a plan to strengthen AI-powered future mobility and upgrade the steel industry.

“Thirteen ministries have come together to prepare this package in response to the tariffs,” said Minister of Trade, Industry and Energy Kim Jung-kwan. “We will act swiftly to ensure the impact is felt on the ground and continue to identify additional support measures that companies truly need.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM WON [[email protected]]