As Trump ups tariffs, GM and Hyundai improve South Korean imports

DETROIT — As President Donald Trump threatens to additional improve tariffs on U.S. buying and selling companions, the best impression for the auto business outdoors of North America could be further levies to South Korea and Japan.

The East Asia international locations produced a mixed 16.8% of automobiles offered final yr within the U.S., together with a report 8.6% from South Korea and eight.2% from Japan, in line with information offered to CNBC by GlobalData.

They have been the biggest automobile importers to the U.S. outdoors of Mexico — and so they have little to no duties in contrast with the 25% tariff Trump has threatened imposing on Canada and Mexico.

Automakers akin to Common Motors and South Korea-based Hyundai Motor export automobiles tariff-free from South Korea. The nation overtook Japan and Canada final yr to grow to be the second-largest exporter of latest vehicles to the U.S.

It trails solely Mexico, which represented 16.2% of U.S. auto gross sales in 2024, GlobalData stories.

“Clearly Hyundai has an enormous quantity of publicity. Behind it’s GM … with comparatively giant quantity fashions,” mentioned Jeff Schuster, world vp of automotive analysis at GlobalData. “There’s a number of danger probably right here, however it’s restricted, actually restricted, to these two gamers.”

Imports from Japan are at the moment topic to a 2.5% tariff for automakers akin to Toyota Motor, Nissan Motor and Honda Motor. Automobiles from Japan represented about 1.31 million autos offered final yr within the U.S.

Japan’s share of gross sales has really decreased in recent times, whereas South Korea’s exports and gross sales have continued to rise from lower than 845,000 in 2019 to greater than 1.37 million in 2024.

South Korea has 0% tariffs on vehicles regardless of Trump renegotiating a commerce cope with the nation throughout his first time period in 2018. That accord was touted for enhancing automobile imports to South Korea, however it did little to handle automobile exports to the U.S.

The deal additionally has completed little for growing automotive exports to South Korea, in line with information from the Worldwide Commerce Fee. U.S. passenger automobile exports to South Korea have really decreased by roughly 16%.

The deal additionally has completed little for growing automotive exports to South Korea, in line with information from the Worldwide Commerce Fee. U.S. passenger automobile exports to South Korea have really decreased by roughly 16%.

Separate from vehicles, tariffs on vans exported from South Korea and Japan to the U.S, in addition to elsewhere, are 25%.

A tariff is a tax on imports, or international items, introduced into the USA. The businesses importing the products pay the tariffs, and a few consultants concern the businesses would merely go any further prices on to customers — elevating the price of automobiles and probably lowering demand.

GM is the biggest international direct investor in Korea’s manufacturing business, in line with the automaker’s web site. It has invested 9 trillion South Korean gained (roughly $6.2 billion) since establishing the operations in 2002.

GM produces its Buick Encore GX and Buick Envista crossovers, in addition to the Chevrolet Trailblazer and Chevrolet Trax crossovers, at vegetation in South Korea. The corporate has touted the automobiles as being a pinnacle for the automaker’s worthwhile progress in lower-margin, entry-level automobiles.

“We’re taking out prices of applications, enhancing profitability and creating automobiles that clients love, like the brand new Chevy Trax and the Buick Envista,” GM President Mark Reuss mentioned through the firm’s investor day in October. “Trax and Envista have helped increase our share of the U.S. small SUV market to its highest degree since 2007.”

GM and Hyundai didn’t instantly reply when requested about potential tariffs on South Korea. Kia declined to remark.

Terence Lau, dean of the School of Legislation at Syracuse College who beforehand labored as a commerce professional for Ford Motor, mentioned the automotive business is constructed on free commerce. If tariffs are applied, the business can regulate, however it takes time.

“The automobile business can regulate to something. Actually, it may. It is at all times going to make product that clients need to purchase, as a result of private mobility and transportation is a human want all all over the world,” he mentioned. “What the automobile business can not do properly is pivot on a dime.”

Lau argued {that a} single-digit tariff could be a “nuisance,” however as soon as they hit 10% or extra, that is when further prices can actually started consuming into the margin or merchandise.

Ford Motor CEO Jim Farley final week argued that if Trump goes to implement tariffs affecting the automotive business, it ought to take a “complete” look in any respect international locations to even the enjoying area in North America.

Farley singled out Toyota and Hyundai for importing a whole bunch of hundreds of automobiles yearly from Japan and South Korea, respectively.

“There are thousands and thousands of automobiles coming into our nation that aren’t being utilized to those [incremental tariffs],” Farley mentioned through the firm’s fourth-quarter earnings name with buyers. “So if we will have a tariff coverage … it higher be complete for our business.

“We won’t simply cherry decide one place or the opposite as a result of it is a bonanza for our import opponents.”

The White Home didn’t reply for touch upon potential tariffs on South Korea.

Trump set an Oval Workplace information convention to debate his plan to impose reciprocal tariffs on different international locations for Thursday at 1 p.m. ET, however it’s unclear whether or not South Korea and Japan could be included.

Republican U.S. Home of Representatives Speaker Mike Johnson informed Reuters on Wednesday that he believed Trump is contemplating exemptions that would come with the automotive and pharmaceutical industries, amongst others.