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

DETROIT — As President Donald Trump threatens to additional increase tariffs on U.S. trading partners, the best affect for the auto business outdoors of North America could be extra levies on South Korea and Japan.

The East Asian international locations produced a mixed 16.8% of autos bought final yr within the U.S., together with a report 8.6% from South Korea and eight.2% from Japan, in response to knowledge offered to CNBC by GlobalData.

They had 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 comparable to General Motors and South Korea-based Hyundai Motor export autos tariff-free from South Korea. The nation overtook Japan and Canada final yr to grow to be the second-largest exporter of latest 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 studies.

“Clearly Hyundai has an enormous quantity of publicity. Behind it’s GM … with comparatively massive quantity fashions,” mentioned Jeff Schuster, world vp of automotive analysis at GlobalData. “There’s numerous threat doubtlessly 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 comparable 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 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 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 accomplished little for rising automotive exports to South Korea, in response to knowledge from the International Trade Commission. 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 america. The businesses importing the products pay the tariffs, and a few specialists worry the businesses would merely go any extra prices on to customers — elevating the price of autos and doubtlessly decreasing demand.

GM is the biggest overseas direct investor in Korea’s manufacturing business, in response to the automaker’s website. 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 crops in South Korea. The corporate has touted the autos as being a pinnacle for the automaker’s worthwhile development 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 throughout 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.”

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

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

“The automobile business can regulate to something. Actually, it may possibly. It is at all times 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 business can not do nicely is pivot on a dime.”

Lau argued {that a} single-digit tariff generally is 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 “comprehensive” look in any respect international locations to even the taking part in subject in North America.

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

“There are hundreds of thousands of autos coming into our nation that aren’t being utilized to those [incremental tariffs],” Farley mentioned throughout 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 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 Speaker Mike Johnson told Reuters on Wednesday that he believed Trump is contemplating exemptions that would come with the automotive and pharmaceutical industries, amongst others.