In preparation for the expected introduction of wide-ranging tariffs on goods imported into the US, the South Korean government has set aside $250bn to aid exporters.

The Ministry of Economy and Finance said the funds would be used for both supporting low-income families and the country’s exporters, the chief engine of its economy.

Announcing the investment, the ministry said: “[The] Korean economy has recently faced sluggish recovery in domestic demand, while the pace of export growth is slowing, and the uncertainty regarding future growth paths is increasing.

“The external environment is also challenging. Changes in trade and industrial environments caused by policy shifts of the leading country in the global economy and intensified international competition in advanced industries, pose significant challenges for the Korean economy.

“Considering these domestic and external conditions, the growth rate for last year is projected to be 2.1%, while this year’s growth is expected to be further declined to 1.8%.

“Exports are facing elevated downward pressure due to external factors, while domestic demand is expected to be constrained by weak construction activity and depressed economic sentiment, despite mitigation of inflation rates and easing of high interest rates,” it added.

For shippers, there are promises for greater supply of foreign exchange, as well as commitments to provide liquidity for exporters facing supply chain challenges, especially in the event of new tariffs being placed on critical exports such as semiconductors and automotive products by the new US government.

“We will strengthen support of supply chain management in response to shifts in the economic security landscape, provide urgent liquidity support to export companies facing challenges, and supply the largest-ever trade financing, ensuring the upward momentum of exports can be sustained despite challenging conditions,” it said.

“To bolster the semiconductor ecosystem, we will shore up infrastructure support for specialized industrial zones and provide increased policy financing.

“In addition, we will focus on developing strategies for the automotive and battery industries aiming to address external changes, such as possible tariff increase of the new US administration and uncertainties related to the Inflation Reduction Act,” it added.

And interestingly, in the light of recent concerns amongst US lawmakers over the decline of US shipbuilding and the stated intent to reduce reliance on Chinese shipbuilders, the ministry said it would “step up the government’s response to new demand in traditional manufacturing industries such as shipbuilding, steel, and petrochemicals, and secure competitiveness through value-added innovation”.

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Speaker: Henrik Schilling, managing director, global commercial development at Hapag-Lloyd

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