[2025 National Assembly Audit] Minister Kim Jeonggwan: "Complete Industrial Overhaul Through National Interest and Pragmatism-Centered Trade"

Attending the National Assembly's Trade, Industry, Energy, SMEs and Startups Committee Audit Today
"Focusing All Efforts on Follow-up Consultations for Korea-US Tariff Negotiations"
"Improving Industrial Structure through National Interest and Pragm

Yonhap News

Minister of Trade, Industry and Energy Kim Jeonggwan has signaled a major transformation in industrial policy, emphasizing a "national interest and pragmatism-centered trade and commerce" approach. He presented a blueprint for restructuring the industrial landscape, focusing not only on tariff responses but also on strengthening advanced industry competitiveness and promoting balanced regional growth. He stated, "The government will prioritize the national interest, but will also minimize corporate losses through pragmatic negotiations and support."

At the National Assembly’s Trade, Industry, Energy, SMEs, and Startups Committee audit held on the 13th, Minister Kim said, "The Korea-US tariff negotiations are not just about adjusting tax rates; they are issues that determine the industrial structure and national competitiveness. The Ministry of Trade, Industry and Energy will respond proactively to turn this crisis into an opportunity."

He continued, "Since reaching a broad agreement with the United States on July 30, we have been focusing on follow-up discussions, including financial packages. We have also prepared support measures for our export companies to minimize the impact of tariffs."

During this audit, the Korea-US tariff negotiations were undoubtedly the most pressing issue for the ministry. According to the "2025 National Assembly Audit Work Report" submitted by the ministry, the Korean government is currently negotiating with the United States to specify the timing for automotive tariff implementation, the application of Most Favored Nation tariffs under Section 232 for semiconductors and pharmaceuticals, and tariff reductions for strategic products such as aircraft and generic pharmaceuticals.

The ministry particularly noted that as the United States pursues aggressive industrial policies centered on protectionism and subsidies, the multilateral trade order led by the WTO is reaching its limits. Domestically, support for advanced industries remains largely indirect-mainly through tax benefits or financial guarantees-putting Korea at a growing disadvantage in the global competitive environment.

The ministry also identified U.S. export controls on semiconductors to China and China’s monopoly over critical minerals such as rare earth elements and tungsten as factors deepening supply chain instability. The global supply chain crisis is becoming structurally prolonged, and Korea’s export structure remains highly dependent on specific countries, making it vulnerable to external shocks.

There are also significant structural issues within the domestic industry. The ministry pointed to declining productivity and sluggish investment across the industrial sector, noting that total factor productivity growth has remained in the low 0% range since the 2010s. Manufacturing competitiveness is weakening due to China’s rapid catch-up, the technology gap in advanced industries is narrowing, and traditional core industries are facing declining profitability due to global oversupply. The concentration of population and industry in the Seoul metropolitan area, stagnation in the growth of mid-sized companies, and other factors are also cited as reasons for the declining dynamism of the industrial ecosystem.

Currently, the Korea-US tariff negotiations are stalled over the "method of investment execution." The United States is demanding that the $350 billion in investments pledged by Korea be made primarily as cash investments, rather than as guarantees or loans. In contrast, the Korean government maintains that "executing the entire amount in cash is realistically impossible," and insists on pursuing a variety of investment methods, including public-private joint funds and financial packages.

Minister Kim stressed the importance of re-engineering Korea’s fundamental industrial competitiveness, stating, "With growing uncertainty due to U.S. protectionism and China’s monopoly over critical minerals, now is the time to redesign the core competitiveness of our industries."

Minister Kim outlined three main policy directions for the ministry this year: "A new leap forward for K-Industries in growth and recovery," "National interest and pragmatism-centered trade and commerce," and "Sustainable growth based on coexistence and cooperation." He said, "We will strengthen strategic cooperation with major countries such as the United States, China, and Japan, and diversify our cooperation networks to include Global South countries such as those in the New Southern Policy region. To ensure continuous export growth, we will diversify export items and markets and significantly expand support infrastructure such as trade finance and marketing."

The government has secured a record-high amount of trade insurance (270 trillion won) to manage export risks and is strengthening direct support for key affected industries such as automobiles and steel through export vouchers and management funds. In particular, for companies struggling with U.S. tariffs, a "Tariff Response 119" integrated consultation center has been set up to expand export financing and supply chain guarantees. The government is also working with the Ministry of Foreign Affairs to resolve visa issuance issues for companies investing in the United States, and is providing parallel support for affected industries by developing alternative markets, stimulating domestic demand, and promoting domestic investment.

Minister Kim also emphasized restoring industrial competitiveness through manufacturing innovation. He stated, "We will fully promote Manufacturing AX, or M.AX, to overcome challenges such as population decline and falling productivity in the manufacturing sector. By 2030, we will introduce 500 'AI Factories' to increase productivity by more than 30%." In this regard, the government has established M.AX alliances in 10 sectors, creating a cooperative system involving over 1,000 industry, academic, and research organizations. The plan is to commercialize new technologies such as on-device AI semiconductors and embedded AI, and to establish "AX demonstration complexes" in industrial parks to accelerate the adoption of AI in the industrial field.

Minister Kim also presented policy directions to address regional imbalances and promote sustainable growth. He said, "It is vital to develop regions that still have growth potential. We will foster five core and three specialized growth engines and promote local investment." He added, "We will also accelerate the creation of renewable energy self-sufficient cities (RE100 industrial complexes), and by encouraging collaboration between mid-sized and small businesses, we will strengthen the growth ladder connecting large, mid-sized, and small enterprises."