Economists and policymakers are sounding alarms over dual crises: a looming 25% U.S. tariff on imported vehicles—set to take effect this week—and widespread wildfires that have ravaged southeastern regions since March 21. The compounded threats have accelerated calls for bipartisan support of an emergency spending plan to shore up economic resilience and mitigate long-term damage.
South Korea’s automotive sector—one of its primary export engines—is bracing for impact as President Donald Trump's tariff policy targets imported vehicles. With over 50% of Korea's car exports bound for the U.S., the tariffs could cause a sharp contraction in trade performance. The Organization for Economic Co-operation and Development (OECD) recently downgraded Korea’s 2025 GDP growth forecast from 2.1% to 1.5%, citing global trade frictions as a key factor.
“Any further delay in passing a supplementary budget will only drag down economic growth,” said Ha Joon-kyung, economics professor at Hanyang University. “The trade outlook has deteriorated, and we must act preemptively.”
Industry experts also note the tariffs may lead Korean automakers such as Hyundai and Kia to accelerate their manufacturing shift to U.S.-based plants, potentially leaving domestic suppliers—especially small and medium-sized enterprises (SMEs)—vulnerable to revenue losses and workforce reductions.
“For these suppliers, government support through a supplementary budget could be a matter of survival,” said Shin Il-soon, economics professor at Inha University.
Meanwhile, record-breaking wildfires have scorched over 67,000 football fields’ worth of land, devastating farmlands and critical regional industries. Crops such as garlic and mushrooms, which form the backbone of local economies, will require years to recover—putting additional strain on household incomes and consumer activity.
In response, Finance Minister Choi Sang-mok has proposed allocating at least 10 trillion won (~$6.8 billion USD) in supplementary funds to support recovery efforts and disaster relief. “Extra spending must prioritize disaster response, trade competitiveness—particularly in artificial intelligence (AI)—and livelihood improvements,” Choi said during an emergency ministerial meeting.
Despite growing consensus on the need for fiscal intervention, political divisions have stalled progress. While the main opposition Democratic Party advocates for direct cash handouts and vouchers to aid citizens, the ruling People Power Party has been reluctant—though is now signaling openness amid broader economic and political pressures, including unrest following President Yoon Suk Yeol’s martial law declaration in December.
The delay in approving supplemental funds highlights the ongoing tension between long-term economic planning and short-term political posturing. As South Korea grapples with converging environmental and economic crises, analysts agree: swift, targeted investment is essential to buffer against cascading impacts and lay groundwork for a resilient, innovation-driven recovery.
