South Korea approves $23.3B extra budget to counter US tariff risks
The Parliament of South Korea approved a 31.8 trillion won ($23.3 billion) supplementary budget on Friday.
The action is part of President Lee Jae Myung’s scramble to breathe life into a slowing economy and shield vital industries as trade tensions with the United States threaten to upend commercial ties.
The supplementary budget, which was passed after bitter debates and a boycott by the opposition, is greater than the government’s proposal of 30.5 trillion won. Legislators tacked additional funding for direct cash handouts and emergency aid to distressed industries.
The Finance Ministry said the new number shows the importance of falling back on more efficient support measures in light of the double risk of a slowdown in the country and international shocks.
The new relief bill is arriving at a critical time. Seoul and Washington have a deadline of July 9 to resolve closing differences on the revised US-Korea Free Trade Agreement. US President Donald Trump has warned he may impose duties on imports from major trading partners, including South Korea, should the talks fail to bear fruit.
Any move toward a reciprocal tariff increase from 10% to 25% would also seriously blow up Korean exports, such as automobiles, batteries, and semiconductors, propelling the economy.
President Lee moves to close revenue gap with stimulus budget
That bill contains a 10.3 trillion won fund to compensate for shortfalls in tax revenue. The government has been hit with lackluster corporate tax collections amid poor earnings in key sectors such as manufacturing and retail. Consumer demand is also down, putting yet more pressure on public finances.
The government will fund that mostly through borrowing. The figure will mostly be for new sovereign bond issuance, spending cuts, and reallocating existing budget lines.
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