South Korea’s government said Tuesday it will restructure the domestic steel industry and expand financial support for exporters as the sector faces growing strain from U.S. and European Union tariffs and worsening oversupply.

The Ministry of Trade, Industry and Energy said it plans to take “preemptive steps” to adjust production capacity in oversupplied product segments while introducing new policy and financing measures to help exporters navigate rising trade barriers.

Officials said the move reflects mounting signs of crisis in one of South Korea’s core industrial sectors, which has been squeezed by falling global demand, surging energy costs, and escalating protectionist measures abroad.

The restructuring effort is expected to include production realignment, targeted subsidies for high-value steel exports, and measures to boost competitiveness through innovation and low-carbon production.

Analysts said the initiative underscores the government’s concern over the industry’s deteriorating profitability and export outlook, as the combined effect of trade restrictions and weak construction demand threatens to prolong the downturn.