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

DETROIT — As President Donald Trump threatens to additional enhance tariffs on U.S. buying and selling companions, the best affect for the auto trade exterior of North America can be further 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 keeping with information offered to CNBC by GlobalData.

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

Automakers resembling Normal Motors and South Korea-based Hyundai Motor export autos tariff-free from South Korea. The nation overtook Japan and Canada final yr to change into the second-largest exporter of latest 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 reviews.

“Clearly Hyundai has a large quantity of publicity. Behind it’s GM … with comparatively massive quantity fashions,” mentioned Jeff Schuster, world vp of automotive analysis at GlobalData. “There’s plenty of threat doubtlessly right here, however it’s restricted, actually restricted, to these two gamers.”

Imports from Japan are presently topic to a 2.5% tariff for automakers resembling 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 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 vehicles 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, however it did little to deal with car exports to the U.S.

The deal additionally has achieved little for rising automotive exports to South Korea, in keeping with information from the Worldwide Commerce Fee. U.S. passenger car 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 overseas items, introduced into the USA. The businesses importing the products pay the tariffs, and a few consultants worry the businesses would merely cross any further prices on to shoppers — elevating the price of autos and doubtlessly lowering demand.

South Korea-based Hyundai is the biggest exporter of autos to the U.S., adopted by GM after which Kia Corp., part of Hyundai that largely operates individually within the U.S.

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

GM is the biggest overseas direct investor in Korea’s manufacturing trade, in keeping 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 crops 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 packages, enhancing profitability and creating autos that clients 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 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 Regulation 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 carried out, the trade can regulate, however it takes time.

“The automobile trade can regulate to something. Actually, it could. It is at all times going to make product that clients wish to purchase, as a result of private mobility and transportation is a human want all all over the world,” he mentioned. “What the automobile trade can’t 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 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 trade, it ought to take a “complete” have a look at all international locations to even the enjoying discipline in North America.

Farley singled out Toyota and Hyundai for importing lots 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 will have a tariff coverage … it higher be complete for our trade.

“We will not 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 can be included.

Republican U.S. Home 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.