South Korea's Response to US Import Tariffs: Boosting EV Subsidies

KatadataOTO – Import tariffs imposed by the United States government apply to many countries such as South Korea. 

This is bad news, especially for countries that export, particularly in the automotive sector, to the US.

The export market will be disrupted, sales could be affected, and job opportunities are predicted to shrink due to the US import tariffs.

Facing this challenge, the South Korean government has prepared several emergency measures to maintain the performance of the automotive industry.

Photo : Hyundai

“An additional budget of 10 trillion KRW (Korean Won) is intended to respond to changes in the trade environment, as well as to support the strengthening of industrial competitiveness,” read an official statement from the South Korean Ministry of Economy and Finance, quoted on Thursday (10/04).

This figure is equivalent to Rp 115.1 trillion when converted to the rupiah exchange rate. For affected companies, there is export assistance with funds of more than 100 billion KRW (Rp 1.15 trillion).

Specifically in the automotive sector, the South Korean government is also providing subsidies for EVs (Electric Vehicles).

“The corresponding subsidies for EVs related to manufacturer discounts will be increased to a maximum of 80 percent, while increasing investment support through the development of autonomous technology and other future cars,” the statement read.

Parts suppliers are also given relief in facing the implementation of US import tariffs in the form of an additional 2 trillion KRW (Rp 23 trillion) in funds.

To maintain the export market, the government will also support expansion into other countries such as Africa, Latin America, and Asia, where demand is currently growing.

In Indonesia, the government will negotiate with the US government regarding import tariffs. 

Photo : Courtesy

Although Indonesia is said to not yet export vehicles to the US, another potential impact is the flooding of foreign products into the domestic market.

This is because countries that usually export to the US are facing obstacles and are choosing other alternatives.

“The government can apply selective tariffs, for example by raising tariffs for completely built-up (imported) vehicles from China,” said Yannes Martinus Pasaribu, an automotive observer and academic from ITB (Bandung Institute of Technology) to KatadataOTO recently.