Korean Government Boosts Support for Export Companies Before U.S. Tariff Deadline

As the world gears up for significant trade shifts, South Korea finds itself at a crucial crossroads with just 50 days remaining until the U.S. enacts country-specific tariff exemptions on July 8. In response to these evolving trade dynamics, the Korean government is bolstering its support for export companies. This initiative is particularly relevant as it seeks to navigate the complexities imposed by recent tariff regulations.

The Korea Trade-Investment Promotion Agency (Kotra), in conjunction with the Ministry of Trade, Industry and Energy, has unveiled plans to expand the “Tariff Response Voucher Program.” This expansion is backed by a supplementary budget confirmed on May 1, amounting to a substantial 84.7 billion won ($60.4 million). This financial injection aims to provide additional resources for roughly 2,000 small- and medium-sized export firms.

The Tariff Response Voucher Program, initiated in the previous month, is a significant improvement over an earlier export voucher system designed to assist companies in mitigating impacts resulting from tariffs sparked during the Donald Trump administration. Under this enhanced program, the government covers a portion of costs for various essential services, including damage analysis, strategic planning for tariff responses, relocating production bases, and exploring alternative markets.

Notably, the revamped program extends its support beyond just domestic shipping costs, which were the primary focus of the old export vouchers. Exporters can now benefit from consultations with overseas tariff and legal experts, a crucial addition in today’s complex global trade environment.

The eligibility criteria have also broadened significantly. Initially, only companies exporting directly to the United States qualified for support. Now, the program includes domestic indirect exporters and intermediate goods suppliers who might feel the effects of U.S. tariffs, regardless of whether their products are directly sold to the U.S. market.

“Export companies can now receive practical support from local U.S. customs law firms,” said Kotra Vice President Kang Sang-yeop. He emphasized the additional benefits of the voucher, which can also be utilized for certifications or identifying buyers in alternative markets. This approach empowers companies to proactively manage tariff-related risks, enhancing their resilience amid uncertainty.

Earlier rounds of support have already begun, with Kotra selecting 204 companies from the first round and allocating a total of 9.3 billion won from an initial budget of 36.1 billion won. Among those receiving support, automotive parts and machinery companies comprised the largest segment, accounting for 34.8% with 71 firms represented. This was closely followed by the cosmetics industry with 22 companies (10.8%) and materials companies with 19 (9.3%).

As these companies embark on their support journeys, specific needs emerge. A construction equipment manufacturer that was selected in the first round expressed plans to utilize its entire voucher for consulting services focused on tariff response strategies. Another auto parts firm allocated more than half of its 120 million won voucher limit to strategies aimed at navigating tariffs on steel and aluminum derivatives as well as minimizing docking fees from Chinese shipping companies.

To facilitate the application process, Kotra is set to hold an online briefing session to guide potential applicants through the program’s eligibility requirements, support details, and necessary documentation. The final selection of supported companies is scheduled to be announced on June 19.

“Companies are grappling with increasing difficulties due to evolving tariff policies,” remarked Kotra President Kang Kyung-sung. He highlights the importance of swiftly executing the expanded budget to effectively support exporters facing mounting challenges.

Export vehicles are lined up at the Pyeongtaek Port auto terminal in Pyeongtaek, Gyeonggi on April 29. [NEWS1]