The government will expand trade finance support utilizing private grants to assist industries vulnerable to U.S. tariff measures. Beginning with Hyundai Motor and Kia being the first to contribute funds to the trade insurance fund, which had previously only been funded by the government or banks, the plan is to extend support to other sectors such as semiconductors, shipbuilding, and steel.
However, in the steel industry, where a 50% tariff has been imposed by the U.S., even large corporations such as POSCO are facing crises, raising concerns that supporting small and medium-sized enterprises through private grants will be difficult.
According to the Ministry of Trade, Industry and Energy on the 18th, the trade insurance corporation signed a 'business agreement for export financing support' with Hyundai Motor, Kia, and Hana Bank. The essence of the agreement is to establish a special low-interest financial loan program for automotive partners.
The program is based on 4 billion won contributed by Hyundai Motor and Kia (1 billion won) and Hana Bank (3 billion won) to the trade insurance fund. Of this, 850 million won will be used to partially support the guarantee fees of the qualifying corporations. The remaining 3.15 billion won in contributions will support preferential financing amounting to 630 billion won, which is 20 times the contribution.
Through this, Hyundai Motor and Kia partners can now secure funding at preferential interest rates up to 2 percentage points lower than the standard rates. The trade insurance corporation will also separately provide benefits such as raising guarantee limits, extending guarantee periods (from 1 to 3 years), and reducing guarantee rates (from 1% to 0.65%).
This marks the first time that a manufacturing corporation has contributed to the trade insurance fund. The government amended the 'Trade Insurance Act Enforcement Decree' in February of this year to add 'local governments' and 'corporations' as entities eligible to contribute to the fund. This has established a system that allows local governments or corporations to receive trade insurance programs tailored to regional and industrial demands.
Minister of Industry Kim Jeong-kwan, who attended the signing ceremony, noted, 'Today's signing ceremony is a meaningful occasion to provide a solid support pillar of export financing to small and medium-sized partners whose fundamental strength has weakened,' adding, 'We expect that the public-private cooperation financial support framework established this time will robustly back small and medium-sized exporters.'
The government plans to expand trade finance support through private contributions to other industries. Major export industries, such as semiconductors, which are expected to be significantly impacted by U.S. tariffs, are being considered for support.
A government official said, 'Ultimately, since (financial support) is made possible through contributions from corporations, we cannot say definitively what the specific plans are at this stage,' but added that 'we are pushing to expand support to industries such as semiconductors and shipbuilding.'
However, the government is reportedly facing difficulties in expanding support for the steel industry, which has been subjected to a 50% item tariff from the U.S.
The government official explained, 'Large corporations such as POSCO and Hyundai Steel are also experiencing crises, so there is a position that we do not have enough capacity to contribute,' adding that 'the government's policy is to strive for support for the steel industry.'
Earlier, the U.S. announced that it would expand the scope of the 50% item tariff on imported steel and aluminum products to include 407 derivative products such as refrigerators and automotive parts. The Korea International Trade Association analyzed that the import value of these newly added tariff items from the U.S. to Korea reached approximately $11.89 billion based on last year's figures.
The Ministry of Industry stated, 'To minimize damage to our corporations, we will significantly expand the currently operating support project for small and medium-sized enterprises in response to import regulations,' adding, 'We will drastically widen the consulting targets for verifying steel and aluminum content and proof of origin, and also significantly lower the burden costs for companies.'