S Korea prepares W366 trillion trade package to counter US tariffs

SINGAPORE (ICIS)–South Korea’s government on 18 February unveiled an emergency trade package worth at least won (W) 366 trillion ($255 billion), the largest ever, as economic cushion amid a global trade war.

Of that amount, trade insurance worth W100 trillion will be provided to small and medium-sized enterprises (SMEs), the Ministry of Economy and Finance said at a 18 February meeting chaired by Acting President Choi Sang-mok.

Tax incentives will be offered to companies with existing businesses overseas which may be looking at relocating back to South Korea amid the trade situation.

The ministry said that there will also be a W1.2 trillion marketing budget to further boost promotional efforts for SMEs, including in the “Global South”, referring to the emerging economies of Brazil, Vietnam and South Africa, among others.

In 2024, South Korea’s exports were at an all-time high of $683.7bn, up by 8.1% in the previous year.

For 2025, however, export prospects are more uncertain than ever due to recent announcement of policies by the Trump administration in the US, said Choi.

US President Donald Trump has announced reciprocal tariffs as well as tariffs of around 25% on vehicle imports, which could hit South Korea hard.

The US’ 25% tariffs on steel and aluminium will take effect on 12 March, while its additional 10% tariffs on Chinese goods took effect on 4 February.

In January, South Korea had prepared a W10 trillion stabilization fund  amid concerns about fresh US tariffs before Trump’s inauguration as the 47th US president.

South Korea’s petrochemical industry is a major exporter of the feedstock ethylene, as well as aromatics such as benzene, toluene and styrene monomer (SM).

However, an oversupply from China as well as weakening demand overseas have posed ongoing challenges for the industry.

($1 = W1,439.23)