South Korea to boost export measures as U.S. tariff deadline nears

South Korea has promised fresh measures for its major export industries, from biopharmaceutical makers to car producers, as the country braces for the economic impact of U.S. tariffs imposed by Trump.

The government has already rolled out aid for auto and chip firms after Washington announced 25% duties on Korean goods. Acting Finance Minister Kim Beom-seok said on Wednesday that the new package will “prepare in advance for item-specific tariffs, such as pharmaceutical products and semiconductors, and strengthen support for ‘U-turn’ investments.”

Officials added that extra measures for biopharmaceutical businesses will follow once the United States clarifies the details of the tariffs on the pharma sector.

Pressure from the White House has grown since early May, when President Trump signed an executive order to speed up approval of drug-manufacturing plants at home. That step fits a broader push to boost domestic production, after probes into foreign pharmaceutical imports were launched.

Pharmaceuticals are a strategic but small slice of South Korea’s trade. Shipments were $9.59 billion in 2024, only 1.4% of total exports, yet 16% of those medicines went to the United States, the sector’s largest market.

Industry leaders in South Korea are weighing a response 

Seo Jung-jin, chairman of Celltrion, said last week the firm would delay a decision on U.S. contract-manufacturing plans by six months. “It is still unclear whether entering the U.S. is the right answer,” he noted, pointing to high costs in a country where Celltrion earns nearly 30% of its revenue. 

Regulators are also on the move. U.S. Food and Drug Administration inspectors landed at Samsung Biologics’ plant in Incheon on May 19 for a routine visit that ends on May 27. Samsung Biologics said the trip is not linked to the surprise checks conducted by the Trump administration at some overseas factories.

Investors reacted swiftly. Samsung Biologics shares climbed more than 7% on Wednesday, lifting the benchmark KOSPI index by 1.1% in early trade. Celltrion gained 0.5%.

Seoul signaled that more support measures could follow. Authorities have already assembled 28.6 trillion won ($20.6 billion) worth of measures to prevent liquidity problems, widen export markets, and fund companies that want to bring operations back home.

Additional steps will be added if necessary to shore up sectors such as automobiles, the finance ministry said.

Seoul is trying to negotiate a tariff deal by the July 8 deadline

Most of the U.S. tariffs are set to begin on July 8, after a 90-day grace period. Following two rounds of ministerial talks, Korean and U.S. officials are holding technical sessions this week as Seoul tries to craft a deal and win exemptions by early July.

Trade and Industry Minister Ahn Duk-geun said Friday that Seoul would try to negotiate a tariff deal by the deadline. However, he warned that domestic politics could result in a slip. After months of political unrest, South Korea is holding a snap presidential election on June 3.

A separate caution came Wednesday from Minister for Trade Cheong In-kyo, who told lawmakers that exports to the United States and China will likely fall in May under the weight of the tariffs.

In the first 20 days of May, Korean exports dropped 2.4% year on year, with U.S.-bound shipments down 14.6%. The slide, driven by autos, parts, and steel, follows an unexpected rise in April when strong semiconductor demand briefly lifted overall sales.

With less than 7 weeks until the tariffs take effect, South Korea is racing to shield its export-led economy from a fresh shock while it searches for a political compromise in Washington.

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