Donald Trump, the President of the United States /Courtesy of Yonhap News Agency

The Donald Trump administration in the United States announced on the 28th (local time) that it will temporarily suspend federal-level subsidies and loans.

According to the Associated Press and Washington Post, Acting Director General Matthew Bass of the Office of Management and Budget noted in a memo sent to each government agency on the 27th that federal-level subsidies and loan expenditures will be temporarily suspended starting from 5 p.m. Eastern Time on the 28th.

The memo also directed each agency to conduct a comprehensive analysis to determine whether the federal-level subsidies and loan programs align with the policy direction of the Trump administration and to submit a report by the 10th of next month.

It means that subsidies that do not comply with President Donald Trump's executive order, which bans political correctness (PC) initiatives at the federal level and restricts expenditures related to clean energy, could be eliminated.

Bass stated in the memo that 'Marxist equity, transgenderism, and the Green New Deal policy do not improve the daily lives of the people we serve, and they waste taxpayer money.' The Green New Deal is an eco-friendly industrial policy promoted by the Biden administration.

The size of federal-level subsidies and loans affected by this decision could reach trillions of dollars and could cause widespread disruption in health research and educational programs, according to the Associated Press.

However, the memo stated that Medicare and social security benefits are not included in the target of this suspension of subsidy execution.

Accordingly, loans that Korean companies are set to receive under the Inflation Reduction Act (IRA), a legislative achievement of the Biden administration, and subsidies that Korean semiconductor companies like Samsung Electronics and SK hynix, which are pursuing large-scale investments in the U.S., are set to receive under the CHIPS Act may also be affected.

However, this memo specifies that the suspension of subsidy execution will be implemented 'to the extent permitted by applicable law,' leading to analyses suggesting that it remains to be seen whether subsidies will be suspended for Korean corporations that have already finalized contracts related to loans or subsidies with the U.S. government.