The South Korean government has announced a 4.6 trillion won (US$3.25 billion) aid package for small and medium-sized enterprises (SMEs) impacted by US tariffs.

This support includes financing and subsidies to help offset logistics costs.

Eighty-one percent of SMEs reported being vulnerable to the 25% tariffs imposed by the US in April, which were later suspended for 90 days.

In the first quarter of 2025, SMEs accounted for 17% of South Korea’s total exports.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ South Korea’s SME support reflects broader economic rebalancing efforts

South Korea’s targeted 4.6 trillion won ($3.25 billion) support package for SMEs highlights a strategic shift in an economy historically dominated by large conglomerates (chaebols).

The support comes in a business environment where income disparity is significant, with SME workers earning only about 63% of wages paid at chaebols, contributing to economic inequality1.

While representing 17% of South Korea’s exports in Q1 2025, these smaller businesses remain particularly vulnerable, with 81% considering themselves at risk from potential U.S. tariffs.

This support package continues South Korea’s long-term effort to create a more balanced economic structure, following years of policies favoring large conglomerates that control approximately 50% of the country’s stock market1.

The focus on SMEs reflects a recognition that economic resilience requires support for smaller businesses alongside the chaebols that transformed South Korea from an agrarian economy to an industrial powerhouse.

2️⃣ Global pattern shows SMEs disproportionately affected by tariff uncertainty

South Korea’s experience mirrors a global trend where small and medium enterprises face heightened vulnerability to trade tensions and tariff threats.

Recent surveys show over half of small business owners internationally expect tariffs to increase their operating costs, with more than 40% predicting sales declines as these costs transfer to consumers2.

For SMEs operating on thin margins, the estimated global tariff-induced finance gap has reached $5.7 trillion, creating significant operational pressures3.