Korea's major financial institutions are implementing extensive support plans for small and medium-sized enterprises and key exporters in response to ongoing economic challenges induced by new US tariff measures.

Financial authorities have stressed the need for the financial sector to enhance its core functions to maintain market stability since US President Donald Trump announced a universal 10 percent tariff on all imports and a 25 percent "reciprocal tariff" specifically targeting Korea.

During a meeting Tuesday, Lee Bok-hyun, governor of the Financial Supervisory Service, emphasized the complexities of the tariff impacts and instructed officials to analyze production and supply chain routes for affected exports to assess damages.

“Following the announcement of the US reciprocal tariffs, concerns over a global economic recession have intensified, and the immediate retaliatory measures from China increase the likelihood of escalating trade conflicts, significantly amplifying volatility and uncertainty in both global and domestic financial markets,” he said.

On Monday, Financial Services Commission Chairman Kim Byung-hwan urged financial groups to take a central role in stabilizing the market and actively supporting business funding. “With concerns that the US tariffs will jeopardize the operations of export firms and their partners, it is essential to ensure that necessary funding and support are provided in a timely manner,” he said.

The IBK Economic Research Institute estimated that exports to the US would decrease by 12.8 percent and total exports by 4.6 percent due to the US imposition of a 25 percent "reciprocal" tariff.

KB Financial Group plans to launch an 8 trillion won ($5.43 billion) preferential interest rate program through its key subsidiary, KB Kookmin Bank.

The bank will increase its loan limit for the predecision interest rate preferential program from 1.5 trillion won to 3 trillion won.

A special interest rate program aimed at companies linked to national strategic industries will expand from 3 trillion won to 5 trillion won. Additionally, KB Financial Group will contribute 23 billion won to the Korea Credit Guarantee Fund and the Korea Technology Finance Corporation, facilitating 840 billion won in guarantees.

To support automotive-related companies facing challenges due to US tariffs, KB will establish a partnership with the Korea Credit Guarantee Fund, providing low-interest mutual growth loans totaling 150 billion won.

"We will actively work to stabilize the financial market and provide funding support to the real sector, including small and medium-sized enterprises," an official from KB said.

Shinhan Financial Group announced 10.5 trillion won in financial support for SMEs and small business owners, including domestic exporters. A significant portion, 6.4 trillion won, will be allocated to its corporate interest rate preference program, with a 3 trillion won special interest rate reduction for export companies.

Hana Financial Group unveiled an emergency financial support plan worth 6.3 trillion won, focusing on SMEs and small business owners.

The plan includes increasing existing preferential long-term loans to 3 trillion won and providing an additional 3 trillion won in interest rate preferential loans. Hana plans to sign a new guarantee agreement worth 24 billion won with the Korea Credit Guarantee Fund to support auto parts companies.

"For companies facing a liquidity crisis due to tariff damage, various financial benefits will be provided, including the extension of terms without principal repayments, deferral of installment payments, interest rate reductions and support for new funds," Hana stated.

In response to reduced export performance due to tariffs, measures are being considered to allow exceptions for the loan limits of SMEs struggling with trade finance calculations.

Woori Financial Group has formed a task force to aid export and import firms most affected by the tariffs. The task force aims to identify challenges and develop support measures for adversely affected sectors.

By Park Han-na (hnpark@heraldcorp.com)