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South Korea will apply zero tariff rates on liquefied natural gas (LNG) and liquefied petroleum gas (LPG) within quotas in the second half of 2026, as the government moves to tame inflation amid lingering global energy price volatility, the finance ministry announced Thursday.
The Ministry of Finance and Economy said the tariff rates on LNG, LPG, and crude oil used for LPG production will be lowered to zero in the second half, a measure expected to help stabilize consumer prices by lowering utility and transportation costs. The government had earlier planned to lower tariffs 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.
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The announcement, made during a meeting with economy-related ministers on June 18, comes as South Korea's consumer prices rose 3.1 percent in May from a year earlier, the fastest growth in 26 months, matching the pace recorded in March 2024. The tariff-rate quota system, which allows certain volumes of imports to benefit from lower tariff rates within a specified limit, has been a key tool in the government's fight against inflation.
A ministry official said commissioned research conducted annually on the system's impact has consistently shown it puts downward pressure on consumer prices in the energy sector.
Key Claims
- South Korea will apply zero tariff rates on LNG and LPG within quotas in the second half of 2026.
- The tariff-rate quota system allows certain volumes of imports to benefit from lower tariff rates within a specified limit.
- Consumer prices rose 3.1 percent in May from a year earlier, marking the fastest growth in 26 months.
- Tariff cuts on bananas, pineapples, and mangoes will remain in effect through mid-August, taking into account the harvesting season for domestic fruits such as apples and pears.
- South Korea will apply the tariff-rate quota system to nine additional agricultural products, including grape concentrate and juice products, and two types of animal feed through the end of this year.
In a related measure announced on June 26, the government will implement discount events worth 350 billion won (US$226 million) for agricultural and fishery products as part of its goal to keep consumer price inflation at around 3 percent, according to the finance ministry. Under the plan, the government will support discount events at local supermarkets without limiting eligible product categories, a departure from the current program limited to 22 major products with discounts of up to 10,000 won. Consumers will now be eligible for discounts of up to 30,000 won on all agricultural and fishery products.
The finance ministry cited continued increases in agricultural and fishery product prices, as well as upward pressure from an earlier-than-expected monsoon season and high temperatures. “We plan to implement major discount promotions for all agricultural and fishery products for the first time so that people can feel the impact of lower groceries,” the ministry said. The government will also seek to lower prices by pursuing direct imports, including finding new sources for mackerel, including from Britain.
Finance Minister Koo Yun-cheol said during a meeting with economy-related ministers that the government will make efforts to keep inflation at around 3 percent in the second half of 2026.
Earlier, on June 4, the government outlined plans to utilize tariff-rate quotas and reserve releases to address inflationary pressure in the aftermath of supply disruptions caused by the Middle East war. At that time, consumer prices had increased 3.1 percent from a year earlier, driven mainly by higher fuel prices. Agricultural and fishery product prices rose 2.2 percent, led by rice and pork, following a decline in supply due to recent high temperatures.
The government said it would secure more pork and chicken through the tariff-rate quota system and expand the program in June to ease the price burden on food products. It also planned to support discount promotions for agricultural and fishery products while seeking to lower supply costs for chicken and eggs. Additionally, South Korea will import 20 million eggs from the United States and Thailand from June to July and release a combined 8,000 tons of popular fishery products, including pollack and mackerel, through July.
The government will operate a special task force to maintain a stable supply of agricultural and fishery products over the summer season and make proactive efforts to address heat waves and heavy rains to stabilize prices. Touching on fuel prices, the government vowed to maintain flexible policies depending on developments in the geopolitical situation in the Middle East.
Perspectives
- Finance Ministry (South Korea): The government attributes inflation to global energy price volatility, monsoon seasons, and supply disruptions, and argues that tariff cuts and quota expansions will ease consumer prices. A ministry official cited research showing the tariff-rate quota system has consistently put downward pressure on consumer prices in the energy sector.
- Finance Minister Koo Yun-cheol: He emphasized the need for action due to lingering high raw material costs and uncertainties, stating that it will take time for global energy production and transportation infrastructure, as well as logistics supply chains, to fully normalize.