The follow-up measures after the Korea-U.S. tariff negotiations are expected to soon take shape. The government is preparing measures, focusing on increasing the trade insurance supply to 'the largest ever' level of 270 trillion won this year. As the impact of U.S. tariffs on Korean exports intensifies, the aim is to strengthen support for export corporations facing increased uncertainty.
The government is making last-minute adjustments regarding the specific details of the measures and the announcement schedule. It is reported that there is a weight on announcing them at the ministerial meeting on industrial competitiveness enhancement (MINC) to be held on the 3rd.
According to the government on the 2nd, the Ministry of Economy and Finance plans to put 'tariff follow-up measures' as the first agenda item at the MINC meeting on the 3rd. A government official noted, 'Since next year's budget has been submitted to the National Assembly and the Korea-U.S. summit has concluded, we want to focus the MINC on supporting corporations affected by tariffs.' It is expected that Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol, Minister of Trade, Industry and Energy Kim Jung-kwan, and others will attend the meeting.
The measures are expected to include plans to increase the trade insurance execution plan by the end of the year from the current 262 trillion won to approximately 270 trillion won. This amount is 96.4% of the 280 trillion won limit set for trade insurance by the National Assembly this year.
Trade insurance is a system that compensates for losses in case our export corporations fail to collect payments from importers or the financial institutions providing import-export financing fail to recover loans, and it is a key instrument for promoting exports.
The Korea Trade Insurance Corporation (K-sure) evaluates the credit ratings of overseas importers and decides whether to allow insurance subscriptions for export corporations that have requested trade insurance. For applications from financial institutions, it evaluates the overall aspects including the creditworthiness of our corporations engaged in export business, the credit of the destination country, and funding plans.
Earlier, the government announced plans to support trade insurance at a scale of 252 trillion won at the beginning of this year. Subsequently, during the process of organizing the supplementary budget in May, the supply scale was increased to 262 trillion won, and this time it is once again aiming to surpass the maximum supply target. President Lee Jae-myung directed at the Cabinet meeting he presided over for the first time after taking office in June to 'actively expand public sector trade financing for export corporations.'
The Korea Trade Insurance Corporation (K-sure) executed trade insurance of 124 trillion won in the first half of this year. Although about 52.2% of the existing target remains, there is a need to increase execution capacity due to significant issues such as defense industry exports to Poland scheduled in the second half, as well as responding to U.S. tariffs.
The government has established a direction to increase trade insurance supply next year as well. It has set next year's trade insurance contract limit at 310 trillion won, an increase of 30 trillion won from this year, and has raised the contribution amount to the trade insurance fund to 600.5 billion won, which is 7.5 times this year's 80 billion won.
In addition, the government is reportedly reviewing plans to support emergency management funds for corporations affected by tariffs through the Small and Medium Enterprises and Startups Agency, Export-Import Bank, Korea Development Bank, Korea Credit Guarantee Fund, and Korea Technology Finance Corporation (KOTEC).
A government official explained, 'This is a measure to respond to the uncertainty arising from the intensified impact of U.S. tariffs,' adding, 'Final discussions on the specific support methods and scales are underway among the related ministries.'
Meanwhile, according to the 'August export and import trends' announced by the Ministry of Trade, Industry and Energy on the 1st, Korea's exports to the U.S. last month amounted to $8.74 billion, a decrease of 12.0% compared to the same period last year. This marks the first time since August 2023 that exports to the U.S. recorded in the $80 billion range, and the first double-digit decline since May 2020 (29.4%) during the COVID-19 pandemic, a span of 5 years and 3 months.