In a move designed to shield its economy from potential trade disruptions under U.S. President Donald Trump’s administration, South Korea has announced a historic export finance package valued at ₩360 trillion (approximately US$250 billion) for 2025. The pledge, revealed during a meeting of the country’s Export Finance Council on January 20, aims to mitigate the adverse effects of the incoming U.S. trade policies, which could severely impact South Korean industries, particularly semiconductors and batteries.
The Ministry of Finance did not disclose the export finance levels of previous years but emphasized that this year’s commitment represents its largest funding allocation to date. The announcement comes at a critical juncture, with the inauguration of Donald Trump as the 47th president of the United States, leaving South Korean exporters bracing for potential tariffs on key products.
Trump’s trade stance has raised concerns globally, particularly due to his history of imposing high tariffs on U.S. trading partners. During his previous term, he imposed steep tariffs on Chinese imports and threatened similar levies of 25% on goods from Canada and Mexico. He has also floated the idea of blanket tariffs on imports from all countries, a scenario that could hit South Korean manufacturers hard.
South Korea’s export sector showed impressive growth in 2024, with total exports rising 8.1% to a record US$683.7 billion. However, economic analysts, including those from the Peterson Institute for International Economics, have warned that the country’s export growth could decelerate sharply in 2025, potentially slowing to just 1.5%. Factors contributing to this slowdown include the ongoing political uncertainty in South Korea and the anticipated impact of Trump’s trade policies, alongside increasing competition from China.
The political climate in South Korea has added to the challenges. Since December, the country has been embroiled in a political crisis, following the impeachment of President Yoon Suk Yeol, further exacerbating economic uncertainties.
Kim Dong-jun, Deputy Director of the Ministry of Finance’s Support Division, highlighted these external challenges during the finance meeting, noting that the return of Trump’s trade policies had created “uncertainties” for South Korean exporters. “We are concerned that this could negatively affect our companies’ export performance in the future,” he said.
In response to these challenges, the South Korean government has committed to a robust export finance package. The ₩360 trillion allocation will be used to support South Korea’s key industries, with a particular focus on strategic sectors that are facing heightened pressures. The Export-Import Bank of Korea (KEXIM) will allocate ₩50 trillion over the next five years to industries such as semiconductors and batteries, which have been struggling to remain competitive in the global market.
Additionally, the Korea Trade Insurance Corporation (K-Sure) will provide ₩100 trillion in trade insurance over the next year, offering preferential guarantees to small and medium-sized enterprises (SMEs). These guarantees will offer lower interest rates and higher coverage limits, aimed at ensuring the stability of these businesses amid global trade uncertainties.
The government will also increase its foreign exchange rate insurance support, raising the amount to ₩1.4 trillion by 2026, up from ₩1.2 trillion in 2024. Furthermore, spending on government initiatives, such as trade fairs, will rise from ₩2.1 trillion to ₩2.9 trillion as part of efforts to boost South Korea’s global trade standing.
Kim Dong-jun emphasized that the finance package would not be limited to industries facing immediate crises. “In addition to semiconductors and batteries, we are continuing to develop financial support measures with the Export Finance Council to expand the export performance of promising sectors such as defense, nuclear energy, and shipbuilding, particularly through Korea-U.S. cooperation,” he explained.
This comprehensive financial package follows similar moves by China, which also announced plans to expand its export credit insurance programs in response to global trade uncertainties. While China did not explicitly mention Trump, its export credit agency, Sinosure, is expected to increase its coverage for small and medium-sized enterprises and foreign investments.
As South Korea positions itself to navigate the challenges posed by shifting global trade dynamics, the country’s bold export finance strategy underscores its determination to protect its industries and secure its position in an increasingly volatile global marketplace.
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