As Trump eyes more tariffs, South Korea remains safe haven for GM and Hyundai

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

The East Asia international locations produced a mixed 16.8% of autos bought final 12 months within the U.S., together with a document 8.6% from South Korea and 8.2% from Japan, in keeping with knowledge offered to CNBC by GlobalData.

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

Automakers comparable to Common Motors and South Korea-based Hyundai Motor export autos tariff-free from South Korea. The nation overtook Japan and Canada final 12 months to develop into the second-largest exporter of recent automobiles to the U.S., primarily based on gross sales.

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

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

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

Japan’s proportion 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 more 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 enhancing car imports to South Korea, nevertheless it did little to handle car exports to the U.S.

The deal additionally has finished little for rising automotive exports to South Korea, in keeping with knowledge from the Worldwide Commerce Fee. U.S. passenger car exports to South Korea have really decreased by roughly 16%.

The deal additionally has finished little for rising automotive exports to South Korea, in keeping with knowledge from the Worldwide Commerce Fee. U.S. passenger car exports to South Korea have really decreased by roughly 16%.

Separate from automobiles, tariffs on vehicles 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 america. The businesses importing the products pay the tariffs, and some specialists concern the businesses would merely move any extra prices on to customers — elevating the price of autos and doubtlessly decreasing demand.

South Korea-based Hyundai is the most important exporter of autos to the U.S., adopted by GM and then Kia Corp., part of Hyundai that largely operates individually within the U.S.

GM has notably elevated its imports from South Korea in recent times. Its U.S. gross sales of South Korean-produced autos — largely entry-level fashions — have elevated from 173,000 in 2019 to more than 407,000 final 12 months, in keeping with GlobalData.

GM is the most important international direct investor in Korea’s manufacturing trade, 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 autos as being a pinnacle for the automaker’s worthwhile progress in lower-margin, entry-level autos.

“We’re taking out prices of applications, enhancing profitability and creating autos that prospects 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 Hyundai didn’t instantly reply when requested about potential tariffs on South Korea. Kia declined to remark.

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

“The automobile trade can regulate to something. Actually, it could possibly. It is all the time going to make product that prospects need to purchase, as a result of private mobility and transportation is a human want all world wide,” he mentioned. “What the automobile trade can not do properly is pivot on a dime.”

Lau argued {that a} single-digit tariff generally is a “nuisance,” however as soon as they hit 10% or more, 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 trade, it ought to take a “complete” take a look at all international locations to even the taking part in discipline in North America.

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

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

“We will not simply cherry decide one place or the opposite as a result of this can be 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, nevertheless it’s unclear whether or not South Korea and Japan can be included.

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