South Korea Drops Some Food Tariffs in Response to Worsening Economic Crisis

South Korea’s government said on Friday that it would remove tariffs on seven additional food items and roll out financial aid to low-income households to counter rising inflation.

Tariffs will be removed on 100,000 tonnes of imported beef, 82,500 tonnes of imported chicken, powdered milk, coffee beans, green onions, and ethanol materials. The government will also raise the tariff-free quota for pork imports.

These are in addition to the 26 imported items already subjected to zero tariffs, including cooking oil and liquefied natural gas, which will cost 329 billion won ($252.9 million) in total, Yonhap News Agency reported.

President Yoon Suk-yeol presided over the first emergency economic and public livelihood meeting on Friday, at which he pledged to channel an additional 480 billion won ($370 million) in financial assistance for low-income households.

“The government must stabilize people’s livelihoods as a matter of life and death,” Yoon said at the meeting. “We are currently in an emergency. I ask you to come up with all possible measures.”

South Korea’s President Yoon Suk-Yeol in Madrid, on June 29, 2022. (Brendan Smialowski/AFP via Getty Images)

South Korea’s consumer price index rose 6 percent in June, the highest since the Asian financial crisis in the late 1990s, reinforcing bets the central bank would deliver an unprecedented 50 basis-point rise in the policy interest rate at next week’s meeting.

‘Multifaceted Challenges’

Deputy Prime Minister Choo Kyung-ho had previously warned that the “multifaceted challenges” in the economy could result in global downside risks having ramifications on the South Korean economy amid continued high prices.

“The government needs to preemptively brace for the impacts of external shocks on the real economy, such as exports and investment, not to mention prices and financial markets as the economy heavily relies on exports,” Choo said at the emergency ministerial meeting on July 3.

Choo said the country’s exports reached an all-time high in the first half of 2022, growing by double digits over the same period in the previous year.

“However, the export outlook for the second half of this year looks grim given the circumstances, such as major economies accelerating policy tightening, continued high commodity prices as well as continued global supply chain disruptions caused by the prolonged Russia-Ukraine war,” he added.

While inflation has mostly come from outside the country, which relies heavily on imports for energy, food, and industrial products, it comes as President Yoon, who took office two months ago, struggles with falling popularity.

A weekly opinion poll by Gallup Korea showed on Friday the Yoon presidency’s approval rating dipped to 37 percent from 43 percent last week, against a disapproval rating of 49 percent, the first reversal since he took office.

Reuters contributed to this report.