[New Administration Growth Strategy] Korea-U.S. Manufacturing Alliance Strengthened, Full Support for Reshoring Companies... Blueprint to Counter Tariff Shocks

$350 Billion U.S. Financial Package and Expanded Reshoring Grants
Strengthening the Korea-U.S. Manufacturing Alliance in Shipbuilding, Nuclear Power, and AI
Easing Export Concentration by Expanding into the Global South

The government has launched a strategy to absorb the shock of high U.S. tariffs while simultaneously pursuing long-term supply chain stability and diversification of export markets. The plan is to strengthen the Korea-U.S. manufacturing alliance with a financial package, while also implementing a two-track approach: supporting companies affected by tariffs, establishing a supply chain response framework, and expanding into the Global South.

On August 22, the government unveiled its "New Administration Economic Growth Strategy," outlining this blueprint for responding to the changing trade environment. The main pillars include: ▲Strengthening the Korea-U.S. manufacturing alliance ▲Supporting companies affected by tariffs ▲Establishing a new external economic strategy ▲Providing full-cycle support for reshoring companies ▲Building a supply chain response framework.

Steel products are piled up at the export yard of Pyeongtaek Port in Gyeonggi Province on August 8, following U.S. President Donald Trump's announcement to impose a 25% reciprocal tariff on all Korean imports starting August 1. 2025.7.8. Photo by Kang Jinhyung

This strategy is noteworthy as it aims to minimize short-term shocks and secure future growth engines at a time when Korea's key industries are being hit hard by U.S. trade pressure.

To strengthen the Korea-U.S. manufacturing alliance, the government will provide a $350 billion financial package for investments in the United States. The plan is to expand local investments, focusing on strategic sectors such as shipbuilding, nuclear power, and AI, and to broaden cooperation from export-oriented collaboration to include localization and supply chain partnerships.

Support measures for companies affected by tariff shocks will also be implemented. Based on industry-specific impact analyses of the additional U.S. tariffs, tailored measures will be prepared by September 2025. The government will expand export vouchers and provide financial and tax support to mitigate short-term damage, while also offering industry-specific assistance.

In addition, a new external economic strategy will be launched to address changes in the trade environment, such as the rise of protectionism. The government will expand cooperation with the Global South, including ASEAN, India, Central Asia, the Middle East, and Oceania, and strengthen practical cooperation with the EU in advanced science, technology, and supply chains. A development finance system will be established, utilizing public financial institutions and private capital to support the overseas expansion of companies in developing countries through equity investment, guarantees, and loans. Key initiatives include securing alternative export markets, strengthening cooperation with leading AI countries, improving the quality of foreign direct investment, and enhancing economic security capabilities.

Koo Yoonchul, Deputy Prime Minister for Economy and Minister of Strategy and Finance, is speaking at the Supply Chain Stabilization Committee held at the Government Seoul Office in Jongno-gu, Seoul on the 20th. 2025.8.20 Photo by Jo Yongjun

Full-cycle support for reshoring companies will also be expanded. The central government subsidy rate for reshoring grants will be increased, and for companies with a credit rating below K6, guarantee fees will be reduced by an additional 0.1 percentage point. The criteria for calculating government subsidies will shift from the business site to the business unit, allowing multiple reshoring grants for the same site. The scope of special provisions and reductions for state-owned property contracts and rent will be expanded from the current maximum of 50% to 75%.

Key advanced and supply chain companies will be selected and encouraged to return to Korea, and the number of reshoring hubs will be increased from 20 to 25. Dedicated hotlines will be set up at major overseas trade offices to promptly address on-site difficulties. In the second half of the year, eight on-site reshoring promotion seminars will be held domestically, and investment promotion (IR) activities will be conducted through direct visits to countries such as Mexico and Vietnam. In addition, a "Reshoring Enterprise Council" will be established with the participation of the Ministry of Economy and Finance, the Ministry of Trade, Industry and Energy, KOTRA, Korea Industrial Complex Corporation, and reshoring companies to support institutional improvements and address on-site challenges.

The supply chain response framework will also be strengthened. To support domestic production of high-risk economic security items, the government will temporarily compensate for part of the cost difference between domestic production and overseas import prices for two years. Public stockpiling will be expanded, and an "off-site stockpiling" system will be introduced, whereby the government purchases items and stores them in company warehouses, with companies responsible for inventory management and rotation. This aims to establish a public-private cooperative stockpiling system.

A government official stated, "This strategy is intended to minimize damage to our companies amid the spread of protectionism, while at the same time securing new growth engines. We will focus our efforts on fundamentally resolving supply chain risks and the problem of export concentration."