[SEOUL] South Korea’s government pledged more support measures on Wednesday (May 21) for key export industries, including the biopharmaceutical and auto sectors, which are expected to be hit by US President Donald Trump’s sweeping tariffs.
Since Trump slapped tariffs on various products and announced 25 per cent duties on South Korea, Seoul has prepared support packages for its auto and chip sectors, as well as for small and medium-sized exporters.
“The government plans to prepare in advance for item-specific tariffs, such as pharmaceutical products and semiconductors, and strengthen support for ‘U-turn’ investments,” Acting Finance Minister Kim Beom-seok said.
New measures will be prepared to support South Korea’s biopharmaceutical companies, as soon as details of Trump’s tariffs on the sector become available, the government said.
Earlier this month, Trump signed an executive order aimed at reducing the time it takes to approve pharmaceutical plants in the country. The move is part of new regulations to encourage domestic manufacturing, coming after Trump launched probes into pharmaceutical imports in order to put tariffs on the sector.
South Korea’s exports of pharmaceutical products, one of the country’s key strategic sectors, stood at US$9.59 billion in 2024, accounting for just 1.4 per cent of its total exports. Still, 16 per cent of the exports were shipped to the United States, the biggest market.
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Seo Jung-jin, chairman of South Korean drugmaker Celltrion, said last week it was postponing a decision regarding contract-manufacturing operations in the United States by six months, though he expected the impact of new US policies to be limited due to its price competitiveness.
“It is still unclear whether entering the US is the right answer,” Seo said, citing high costs in the country, where the drugmaker earns nearly 30 per cent of its total revenue.
Meanwhile, US Food and Drug Administration officials are visiting Samsung Biologics’ production facilities in Incheon, South Korea, on May 19 to 27 for an inspection, the Yonhap News Agency reported. It was not clear whether the inspection was related to new US policies.
Shares of Samsung Biologics rose more than 5 per cent in early trade on Wednesday, while Celltrion stock rose 0.5 per cent, leading the benchmark Kospi’s 1.1 per cent rise in early trade.
The government said on Wednesday it would also prepare additional support measures, if necessary, to complement packages announced last month to help other sectors, such as automakers.
Authorities have already prepared 28.6 trillion won (S$27 billion) worth of measures to help prevent liquidity issues and expand export markets, as well as to subsidise reshoring moves by companies operating overseas.
South Korea faces a Jul 8 deadline before the bulk of US tariffs are due to start after a 90-day pause.
After a second round of ministerial-level trade talks last week, Seoul is holding working-level technical discussions with Washington this week, as it seeks exemptions on all tariffs by crafting a trade package by early July.
South Korea’s Minister of Trade and Industry Ahn Duk-geun said on Friday that Seoul would try to reach a deal on tariffs by the July deadline, but warned that the target could be missed due to domestic politics. The country holds a snap presidential election on Jun 3 after months of political turmoil.
During the first 20 days of this month, South Korea’s exports fell 2.4 per cent, as US-bound shipments dropped 14.6 per cent, dragged down by autos, auto parts and steel products, data showed on Wednesday. The drop comes after exports unexpectedly rose in April on strong demand for semiconductors. REUTERS
