Lee administration reframes subsidies and loans as industrial policy, but risks moral hazard and global scrutiny

South Korea on Wednesday announced a package of measures to cushion the impact of U.S. tariffs and bolster key industries, including $9.8 billion (13.6 trillion won) in emergency financing for firms hit by trade restrictions. The plan includes low-interest loans for steel and aluminum producers, a new $143.6 million (200 billion won) lending program, interest subsidies for small and mid-sized enterprises and emergency quota tariffs on core steel raw materials.

The government also said it would expand trade insurance to a record $193.8 billion (270 trillion won) this year and create a $71.8 billion (100 trillion won) investment fund to spur growth in strategic sectors. Additional steps include subsidies for electric vehicles and high-efficiency home appliances to stimulate domestic demand, along with expanded liquidity and credit guarantees to help exporters manage higher costs stemming from the U.S. tariff regime.

South Korea on Wednesday announced a package of measures to cushion the impact of U.S. tariffs and bolster key industries, including $9.8 billion (13.6 trillion won) in emergency financing for firms hit by trade restrictions. The plan includes low-interest loans for steel and aluminum producers, a new $143.6 million (200 billion won) lending program, interest subsidies for small and mid-sized enterprises and emergency quota tariffs on core steel raw materials.

The government also said it would expand trade insurance to a record $193.8 billion (270 trillion won) this year and create a $71.8 billion (100 trillion won) investment fund to spur growth in strategic sectors. Additional steps include subsidies for electric vehicles and high-efficiency home appliances to stimulate domestic demand, along with expanded liquidity and credit guarantees to help exporters manage higher costs stemming from the U.S. tariff regime.

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