The South Korean government unveiled plans to help small and medium-sized exporters cope with U.S. tariff threats, injecting 100 trillion KRW (US$69.5bn) into trade insurance for smaller exporters.
Acting South Korea president and finance minister Choi Sang-mok unveiled the plan at a special government export strategy meeting on Tuesday (Feb 18), as U.S. president Donald Trump announced plans for reciprocal tariffs on countries taxing U.S. imports and a 25% tariff on steel and aluminum imports.
Insurance premiums will be discounted by up to 90% depending on the size of the exporter, and the government is also allocating 8.5 trillion won to mitigate foreign exchange volatility risks. Out of the 8.5 trillion won, 3 trillion won is expected to go towards doubling foreign exchange risk insurance, local media reported.
South Korea is very reliant on exports, as its export volume reached a record US$683.7bn in 2024, an 8.1% year-on-year increase, Choi said. Semiconductor exports reached US$141.9bn, and automobile exports exceeded US$70bn for a second year.
The government also announced that it will inject 366 trillion won into trade financing to help exporters avoid a liquidity crisis by borrowing from commercial banks. Korea Trade Insurance Corp. (K-Sure), the country’s export credit agency, also announced an export support chain guarantee offering preferential loans to SMEs.
The government also announced an expansion in trade insurance limits for companies that have suffered losses from trade barriers, reported Korea Maritime News, with a 60% discount on short-term export insurance premiums for small and medium enterprises affected by tariffs.
It will also enhance support for exporters to diversify markets, with plans to supply 55 trillion won in trade insurance for exporters trading with countries in the Global South. Special support for export insurance will also be provided for small and medium-sized firms that sign export contracts with countries in need of reconstruction like Ukraine, reported ChosunBiz.
K-Sure, Korea’s export credit agency, also unveiled plans for an additional 252 trillion won in trade insurance and financing support for exporters, 15 trillion more than the support extended to exporters in 2024.
The export credit agency plans to focus on SME support as its top priority, having provided 988bn won in preferential financing with 7 Korean banks in a “Export Package Preferred Guarantee” with lower interest and higher credit, it said in a press release.
K-Sure supplied a total of 236.6 trillion won in trade insurance in 2024, including the largest-ever support for SMEs, President Jang Young-jin said. The agency is also planning to launch a new product that covers non-payment risk to Korean corporations with local branches, Jang said.
