South Korea Plans 20% Hike in EV Subsidies Amid Ongoing Tariff Disputes

TLDR

• South Korea will increase EV subsidies by 20% in 2026 to stimulate local demand and support the automotive industry.
• The government plans to raise passenger EV subsidies from $535.18 billion to $642.25 billion in 2026.
• Financial support will also be extended to auto parts suppliers, particularly those operating overseas in Mexico and the U.S.
• Hyundai Motors has been significantly impacted by U.S. tariffs, which account for about 40% of the company’s revenue.
• South Korea is pushing for the release of the joint fact sheet that details tariff reductions agreed with the U.S.

South Korea has revealed plans to raise electric vehicle (EV) subsidies by 20% in 2026, as part of its response to the U.S. tariffs. The government intends to boost passenger EV subsidies from $535.18 billion in 2025 to $642.25 billion. This move aims to stimulate local demand and provide additional support for South Korean automakers affected by the tariff issues.

The South Korean government’s new support package extends beyond vehicle manufacturers. It includes financial aid for auto part suppliers, especially those involved in international markets. The government has pledged to provide policy finance levels that exceed the current $10.29 trillion (15 trillion Won) offered to these suppliers.

This financial support will target auto part suppliers operating overseas, particularly those in Mexico and the U.S. South Korean auto part makers will be eligible for long-term, low-interest loans. These measures are intended to strengthen South Korean suppliers’ global competitiveness in key markets.

South Korea Seeks Swift Release of Tariff Fact Sheet

Hyundai Motors, one of South Korea’s leading automakers, has been significantly impacted by U.S. tariffs. The company reports that U.S. exports account for around 40% of its revenue, making it vulnerable to tariff changes. The U.S. imposed a 25% tariff on South Korean auto exports, which was recently reduced to 15%.

The tariff reduction followed a meeting between South Korean President Lee Myung-bak and U.S. President Donald Trump to address trade issues. However, this cut has yet to be formally applied due to the delayed release of a joint fact sheet. The two leaders had agreed to this reduction during their summit last month, but no written agreement has been made public yet.

South Korean Foreign Minister Cho Hyun has called for the prompt release of the joint fact sheet on tariff reductions. Cho met with U.S. Secretary of State Marco Rubio at the G7 Foreign Ministers’ Meeting in Canada on November 12. The joint fact sheet outlines the tariff cut agreement reached during the South Korea-U.S. summit.

Minister Cho emphasized the importance of releasing the joint fact sheet quickly, as it would clarify the terms of the deal. “We will help announce the joint explanatory materials as soon as possible,” stated Marco Rubio. South Korea’s government is pushing to finalize and make this document public to facilitate further trade discussions.

Nuclear Issues and Further Negotiations

While the joint fact sheet addresses tariff reductions, issues related to nuclear energy continue to complicate matters. Reports suggest disagreements between South Korea and the U.S. over uranium enrichment and spent nuclear fuel processing. South Korea seeks these rights for its domestic nuclear industry, but the U.S. has been firm on non-proliferation.

These unresolved nuclear concerns may delay the formal release of the joint fact sheet. The U.S. government’s position on preventing atomic weapons proliferation remains unchanged. However, further negotiations are expected even after the release of the fact sheet.

South Korea is preparing to sign a Memorandum of Understanding (MOU) with the U.S. upon the release of the joint fact sheet. This agreement will cover investments in the U.S. and tariff reductions for South Korean products. The government also plans to publish a joint statement from the South Korea-U.S. Security Consultative Meeting (SMC) to formalize the agreement.

The South Korean government is also seeking to pass a special law in its National Assembly. This law will focus on facilitating investments in the U.S. and implementing the tariff reductions. These measures reflect South Korea’s commitment to strengthening its trade relations with the U.S.

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