Seoul: South Korea aims to expand its budget for trade response measures by 70-fold from this year's budget to 2.1 trillion won (US$1.5 billion) in 2026 to support follow-up measures to its tariff deal with the United States, the government said Friday.
According to Yonhap News Agency, the proposal, approved at a Cabinet meeting held earlier in the day, marks a sharp increase from the 2025 trade response budget of 30 billion won. The budget hike comes after President Lee Jae Myung's administration struck a trade deal with U.S. President Donald Trump's administration last month, lowering U.S. reciprocal tariffs for South Korea to 15 percent from the initially proposed 25 percent.
In return, Seoul pledged to invest a combined $350 billion in the U.S. for bilateral cooperation in shipbuilding and other advanced industries while agreeing to purchase $100 billion worth of American energy products. Of the proposed 2.1 trillion won, the Lee administration earmarked 1.9 trillion won for financing cooperation projects in the shipbuilding, semiconductor, and other sectors under the trade deal.
Such projects include establishing a Korea-U.S. technology cooperation center for a bilateral shipbuilding partnership and boosting the capabilities of small and medium-sized shipbuilders in the maintenance, repair, and overhaul (MRO) market for U.S. naval vessels. The government also plans to provide emergency export vouchers to companies suffering damage from U.S. tariff measures and risk guarantees worth 200 billion won to small shipbuilders amid export uncertainties.
It also aims to expand the support fund for defense export companies by 10 billion won to 30 billion won next year. Separately, the government proposed a 2.2 trillion-won budget for nurturing new export companies, facilitating exports of consumer goods, and supporting materials and parts companies to stabilize supply chains in strategic industries.
For energy initiatives, the government proposed increasing the budget for energy transition to 4.2 trillion won in 2026 from 2.8 trillion won this year to build RE100 industrial complexes and next-generation power grids. RE100 complexes refer to industrial zones entirely powered by clean energy sources under a global initiative that encourages companies to source 100 percent of their electricity from renewable sources as part of efforts to achieve carbon neutrality.
The government also plans to spend 3.7 trillion won on supporting the private sector's efforts to expand carbon emission reduction facilities and establishing a new subsidy program for replacing internal combustion cars with electric vehicles (EVs).