View of the export loading dock at Hyundai Motor’s Ulsan plant (Image courtesy of Yonhap)
SEOUL, Feb. 17 (Korea Bizwire) — If the Trump administration moves forward with tariffs on the automotive sector, South Korea and Japan are expected to be among the hardest-hit nations outside North America, according to industry analysts.
A report from CNBC on February 13, citing consulting firm GlobalData, highlighted that South Korea and Japan accounted for a combined 16.8% of U.S. vehicle imports in 2024, surpassing Mexico’s 16.2%. South Korea alone supplied 8.6% of vehicles sold in the U.S. last year, up from 5% in 2019, while Japanese imports declined from 10.2% to 8.2% over the same period.
Bloomberg also reported, citing U.S. Department of Commerce data, that South Korea was the second-largest vehicle exporter to the U.S. in 2024, shipping 1.54 million units, trailing only Mexico’s 2.96 million. Japan followed with 1.38 million units, while Canada accounted for 1.07 million.
Under the U.S.-Korea Free Trade Agreement (FTA), South Korean automakers currently export vehicles to the U.S. tariff-free, while Japanese automakers face a 2.5% tariff. However, trucks from both countries are subject to a 25% tariff.
South Korea’s Hyundai Motor Group has been a significant exporter, increasing U.S. shipments from 344,000 vehicles in 2019 to 629,000 in 2024. General Motors (GM), which operates a manufacturing facility in South Korea, more than doubled its U.S. exports from 173,000 to 407,000 during the same period, while Kia saw an increase from 244,000 to 335,000.
GM’s South Korean plants manufacture models such as the Buick Encore GX, Buick Envista, Chevrolet Trailblazer, and Chevrolet Trax. The company has invested approximately 9 trillion won ($6.8 billion) in South Korea since 2002, making it the country’s largest foreign direct investor in manufacturing.
German automakers could also face challenges if tariffs are imposed. Volkswagen leads in import reliance, with 80% of its U.S. sales coming from imported vehicles, followed by Hyundai-Kia (65%), Mercedes-Benz (63%), and the Renault-Nissan-Mitsubishi alliance (53%).
Analysts warn that tariffs could drive up consumer prices, reducing demand. Syracuse University law professor Terence Lau noted that tariffs exceeding 10% would significantly impact corporate profitability. CNBC also reported that automakers may pass higher costs onto consumers, potentially slowing the market.
Neither Hyundai, GM, nor Kia provided comments on the potential impact of U.S. tariffs when contacted by CNBC.
President Trump, who recently imposed a 10% tariff on Chinese goods, has signaled an expansion of tariff policies, including a proposed 25% duty on steel and aluminum products set to take effect next month. He has also reaffirmed plans to impose tariffs on key South Korean industries, including semiconductors and automobiles.
Although the U.S.-Mexico-Canada Agreement (USMCA) has provided trade benefits to North American partners, Trump has granted Mexico and Canada a one-month tariff exemption. If enacted, the 25% tariff could extend to the automotive sector.
Ford CEO Jim Farley recently called for a fair approach, urging the Trump administration to ensure that all global automakers are considered when crafting tariff policies. “Hundreds of thousands of vehicles enter the U.S. without being subject to increased tariffs,” Farley said, emphasizing the need for a comprehensive policy approach.
Kevin Lee (kevinlee@koreabizwire.com)
