South Korea pledges to help companies cope with higher US tariffs

New Straits Times

2 days ago

SEOUL: South Korea will prepare measures to help companies cope with higher US tariffs and expand into new markets, the Finance Ministry said on Tuesday, as it kicked off a task force to prepare the new administration's economic policy plans.
On the domestic front, the government will come up with measures to boost short-term demand, as well as financial support for mid- to long-term technology development to enhance market competitiveness, it said in a statement.
South Korea reached a trade deal with the US last week, just days before President Donald Trump's threatened 25 per cent tariff rate was due to come in on its exports to the United States.
The trade deal set tariffs on exports from the Asian country at 15 per cent, still higher than a baseline 10 per cent rate and the near zero tariffs for exports under a Korea-US free trade agreement.
Still, topics left unresolved by the deal provide scope for more disputes as the two countries prepare for a summit between Trump and new South Korean President Lee Jae Myung in the coming weeks.
Trump may use the summit to try to squeeze more concessions on areas such as defence costs and corporate investments, left out of the deal, while non-tariff barriers and currency could prove thorny issues, experts said.
South Korea's Finance Ministry, however, sought to give a positive spin on the agreement.
The deal reduced uncertainty over the trade environment, while a US$350 billion investment package included in the deal will provide new business opportunities for companies, deepen economic cooperation between the two countries, and contribute to a more stable supply chain, the ministry said.
The administration of President Lee also plans to prepare policy measures to foster new industries, such as artificial intelligence, semiconductors and "K-contents" and include them in economic growth strategies and budget plans due to be announced later this month.
K-contents refers to a range of cultural and entertainment goods produced by the country ranging from K-pop to Korean dramas that have boomed globally.
The ministry vowed to bring regulatory improvements to vitalise business activity, as it kicked off a meeting with the country's major business groups.
Asia's fourth-largest economy grew in the second quarter at the fastest pace in more than a year on rebounding consumer spending and a surge in technology exports, but still faces headwinds from slowing global trade amid the sweeping tariffs.
The International Monetary Fund last week raised its outlook for most advanced and emerging economies this year based on developments around US tariff negotiations, but South Korea was among the exceptions, with its 2025 growth forecast revised down to 0.8 per cent from 1.0 per cent.