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 exterior of North America can be further levies on South Korea and Japan.

The East Asian nations produced a mixed 16.8% of automobiles bought final yr within the U.S., together with a file 8.6% from South Korea and eight.2% from Japan, in accordance with information supplied to CNBC by GlobalData.

They had been the biggest automobile importers to the U.S. exterior 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 Basic 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 recent vehicles 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 studies.

“Clearly Hyundai has a large quantity of publicity. Behind it’s GM … with comparatively giant quantity fashions,” stated Jeff Schuster, international vice chairman of automotive analysis at GlobalData. “There’s loads of danger probably 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 akin to Toyota Motor, Nissan Motor and Honda Motor. Automobiles from Japan represented about 1.31 million autos bought final yr within the U.S.

Japan’s share of gross sales has truly 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 take care of the nation throughout his first time period in 2018. That accord was touted for bettering automobile imports to South Korea, nevertheless it did little to handle automobile exports to the U.S.

The deal additionally has executed little for rising automotive exports to South Korea, in accordance with information from the Worldwide Commerce Fee. U.S. passenger automobile exports to South Korea have truly decreased by roughly 16%.

Separate from vehicles, 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 overseas items, introduced into the USA. The businesses importing the products pay the tariffs, and a few consultants concern the businesses would merely cross any further prices on to shoppers — elevating the price of automobiles and probably decreasing demand.

GM is the biggest overseas direct investor in Korea’s manufacturing business, in accordance with the automaker’s web site. It has invested 9 trillion South Korean received (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 packages, bettering profitability and creating automobiles that prospects love, like the brand new Chevy Trax and the Buick Envista,” GM President Mark Reuss stated 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 stage 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 immediately touch upon potential tariffs.

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

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

“The automobile business can modify to something. Actually, it may. 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 all over the world,” he stated. “What the automobile business can’t 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 nations to even the enjoying area in North America.

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

“There are tens of millions of automobiles coming into our nation that aren’t being utilized to those [incremental tariffs],” Farley stated through the firm’s fourth-quarter earnings name with traders. “So if we’ll 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 this can be 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 relating to what nations might be focused.

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

— CNBC’s Kevin Breuninger contributed to this report.