S. Korea to apply zero tariffs on LNG, LPG to tackle inflation
Seoul, June 18
South Korea plans to apply zero tariff rates on liquefied natural gas and liquefied petroleum gas within quotas in the second half of 2026 as the country seeks to tame inflation amid lingering global energy price volatility, the finance ministry said on Thursday.
The Ministry of Finance and Economy said tariff rates on LNG, LPG and crude oil used for the production of LPG will be lowered to zero in the second half, noting the measure is expected to help stabilise consumer prices by lowering utility and transportation costs.
The government earlier planned to lower tariff rates on LNG to 2 percent in the third quarter and 1 percent in the fourth quarter while dropping those on LPG and crude used for LPG production to 1 percent in the second half.
"We conduct commissioned research every year on whether the tariff-rate quota system puts downward pressure on consumer prices, and the findings consistently show that it has had such an effect in the energy sector," a ministry official said.
South Korea's consumer prices rose 3.1 percent in May from a year earlier amid global energy price volatility, marking the fastest growth in 26 months after increasing at the same pace in March 2024.
The tariff-rate quota system allows certain volumes of imports to benefit from lower tariff rates within a specified limit.
"It is expected to take some time for global energy production and transportation infrastructure, as well as logistics supply chains, to be fully normalised," Finance Minister Koo Yun-cheol said during a meeting with related ministries on consumer prices.
"The aftermath of higher raw material costs still remains, and uncertainties have not yet eased significantly," Koo said, noting the government intends to take all available measures to stabilise consumer prices.
South Korea also plans to apply the tariff-rate quota system to nine additional agricultural products, including grape concentrate and juice products, along with two types of animal feed, through the end of this year.
Tariff cuts on bananas, pineapples and mangoes currently in place will remain in effect through mid-August, taking into account the harvesting season for domestic fruits, such as apples and pears. The new policy will take effect July 1 following Cabinet approval.
— IANS
Reader Comments
Interesting move by South Korea—cutting tariffs to zero on energy imports is bold. But I wonder how they'll balance this with domestic production. In India, we often talk about Atmanirbhar Bharat, so it's a delicate dance. Still, if it helps consumers, why not?
South Korea's inflation at 3.1% is similar to what we're seeing in India. Their tariff cuts on energy and agricultural products are practical. But I hope they also invest in renewable energy long-term—LNG and LPG are still fossil fuels. Sustainability matters!
As someone living abroad, I appreciate South Korea's proactive approach. But zero tariffs might hurt domestic energy producers. It's a trade-off. India could learn from this, but we also need to protect our own industries. Balance is key.
This is a good short-term fix, but South Korea should also look at reducing fuel taxes or subsidies for consumers directly. In India, we've seen that tariff cuts alone don't always translate to lower prices if logistics are inefficient. Hope they track the impact closely!
It's encouraging to see a government acting decisively to curb inflation. However, I'm skeptical about the long-term effects—if global prices remain volatile, zero tariffs might just shift costs elsewhere. India should monitor this experiment before adopting similar policies. 🤔
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