South Korean President Seeks Biden's Help To Address Concerns Over EV Subsidy Rule: Why Is Seoul Worried Over The New Law

As the U.S. Inflation Reduction Act (IRA) seeks to eliminate federal tax credits for electric vehicles (EVs) manufactured outside North America, South Korean President Yoon Suk-yeol has asked U.S. President Joe Biden to help address Seoul's concerns over how the new law will hurt the country's automakers, reported Reuters citing Yoon's office.

What Happened: Seoul's opposition to the law, which was signed by the U.S. president last month, has overshadowed Yoon's first trip to the United States since taking office in May, the report said.

Companies like Hyundai Motor Co. HYMTF and its affiliate Kia Corp. are likely to be affected by the new law coming into effect.

See Also: As Biden Meets South Korean President In New York, EV Subsidies' Dispute Holds Sway

"President Yoon requested close cooperation so that the U.S. administration can resolve our concerns in the process of enforcing the Inflation Reduction Act,” said Yoon's office.

Biden said he was "well aware" of South Korea's concerns and asked to continue discussions, it added.

Why It's Important: The U.S. Commerce Department had earlier hinted at tensions between the two nations following a meeting between U.S. Commerce Secretary Gina Raimondo and South Korea's trade minister Lee Chang-yang in Washington on Wednesday.

“Secretary Raimondo and Minister Lee also exchanged frank views on U.S. concerns about South Korea’s pending legislation to impose network usage fees on foreign content providers and South Korea’s concerns relating to electric vehicle tax credits under the recently-passed Inflation Reduction Act,” a statement said.

There is a legislative push in South Korea to require foreign content providers including Netflix Inc. NFLX and Alphabet Inc.’s GOOGL GOOG Google to pay local network fees, according to the report.