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 affect for the auto business outdoors of North America could be extra levies on South Korea and Japan.

The East Asian nations produced a mixed 16.8% of automobiles offered final 12 months within the U.S., together with a report 8.6% from South Korea and eight.2% from Japan, in keeping with information offered to CNBC by GlobalData.

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

Automakers similar to Basic Motors and South Korea-based Hyundai Motor export automobiles tariff-free from South Korea. The nation overtook Japan and Canada final 12 months to change into the second-largest exporter of latest automobiles to the U.S., based mostly on gross sales.

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

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

Imports from Japan are at present topic to a 2.5% tariff for automakers similar to Toyota Motor, Nissan Motor and Honda Motor. Automobiles from Japan represented about 1.31 million autos offered final 12 months within the U.S.

Japan’s proportion of gross sales has really decreased lately, 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 automobiles regardless of Trump renegotiating a commerce take care of the nation throughout his first time period in 2018. That accord was touted for bettering automobile imports to South Korea, however it did little to deal with automobile exports to the U.S.

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

Separate from automobiles, 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 overseas items, introduced into the USA. The businesses importing the products pay the tariffs, and a few consultants concern the businesses would merely go any extra prices on to customers — elevating the price of automobiles and probably lowering demand.

GM is the most important overseas direct investor in Korea’s manufacturing business, in keeping 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 development in lower-margin, entry-level automobiles.

“We’re taking out prices of applications, bettering 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 elevate our share of the U.S. small SUV market to its highest degree since 2007.”

GM and Kia declined to remark when requested about potential tariffs on South Korea. Hyundai touted its operations and investments within the U.S., which the carmaker says have totaled $20.5 billion since coming into the market in 1986, however didn’t instantly touch upon potential tariffs.

“For practically 4 many years, Hyundai has been a driver of American development and innovation, contributing jobs, financial exercise, and investments which have helped People prosper. We welcome the chance to work with the brand new administration to help American manufacturing, defend provide chains, and spur innovation,” Hyundai mentioned Thursday in an emailed assertion.

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

“The automobile business can modify to something. Actually, it will probably. It is all the time going to make product that clients wish to purchase, as a result of private mobility and transportation is a human want all around the globe,” he mentioned. “What the automobile business can’t do nicely is pivot on a dime.”

Lau argued {that a} single-digit tariff is usually a “nuisance,” however as soon as they hit 10% or extra, that is when extra 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 nations to even the enjoying area in North America.

Farley singled out Toyota and Hyundai for importing a whole bunch of 1000’s 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-pick 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 on Thursday signed a presidential memorandum laying out his plan to impose “reciprocal tariffs” on overseas nations, however didn’t go into element concerning what nations could possibly be focused.

As a presidential candidate, Trump floated the potential for imposing across-the-board tariffs on all U.S. imports. However he additionally advocated for Congress to go what he referred to as the “Trump Reciprocal Commerce Act,” which might empower him to slap tariffs on the products of any nation that has greater tariffs on U.S.-made items.

— CNBC’s Kevin Breuninger contributed to this report.