On February 11, U.S. President Donald Trump officially announced a 25% tariff on all steel and aluminum imports into the United States. Alongside this decision, he revealed that his administration is also considering imposing tariffs on automobiles, semiconductors, and pharmaceuticals, raising concerns that South Korea’s exports of these products to the U.S. could face significant challenges. The photo shows export vehicles parked near Pyeongtaek Port, Gyeonggi Province, on February 11. (Yonhap)
SEOUL, Feb. 19 (Korea Bizwire) — South Korea’s auto industry is bracing for potential turmoil after U.S. President Donald Trump suggested imposing a 25% tariff on imported cars, a move that could significantly impact Korean automakers’ competitiveness in the American market.
Trump’s comments on February 18 sent shockwaves through the industry, which had previously anticipated a more modest 10% tariff. The abrupt escalation has raised concerns among industry leaders and analysts, who warn that such a policy could severely undermine South Korea’s automobile exports.
“If a 25% tariff materializes, it would be a serious blow,” said Kim Kyung-yoo, a senior researcher at the Korea Institute for Industrial Economics & Trade. “We were expecting something around 10%, but 25% is far beyond that, leaving little room for an effective response.”
South Korean automakers rely heavily on exports to the U.S., with more than half of locally produced vehicles destined for American buyers. Industry representatives fear that the steep tariff hike could erode price competitiveness and force companies to reassess their global production strategies.
“If the tariff applies universally to all foreign automakers, the impact might be somewhat mitigated,” said one industry official. “But if South Korean companies face higher tariffs selectively, it will be a major setback.”
This photo shows newly produced vehicles from Hyundai Motor in Ulsan waiting to be shipped to customers. (Yonhap)
The potential tariff echoes measures imposed during Trump’s first term, when the U.S. extended a 25% tariff on South Korean pickup trucks until 2040 under the revised Korea-U.S. Free Trade Agreement (KORUS FTA).
Although South Korea has not exported any internal combustion engine pickup trucks to the U.S. in recent years, the precedent raises concerns that similar restrictions could now be applied to passenger vehicles.
According to the Korea Automobile & Mobility Association (KAMA), South Korean automakers exported $70.8 billion worth of vehicles last year, with nearly half—$34.7 billion—going to the U.S. Hyundai and Kia alone shipped approximately 970,000 and 410,000 vehicles, respectively, while GM Korea, which depends heavily on U.S. exports, faces an uncertain future.
A report from IBK Economic Research Institute estimated that if the U.S. enacts the 25% tariff, South Korea’s automobile exports to the U.S. could decline by 18.6% this year. Citibank’s analysis further projected that such a tariff could shave 0.203% off South Korea’s GDP, given the nation’s reliance on automobile and component exports.
South Korean firms had previously benefited from duty-free auto exports under the KORUS FTA, but Trump has signaled he may not grant exemptions even to U.S. allies. Industry observers worry that with a lack of strong leadership in South Korea’s government, there are few diplomatic levers available to negotiate relief.
While Hyundai and Kia may offset some losses by ramping up U.S. production, smaller automakers and parts suppliers—especially GM Korea—are more vulnerable. Experts warn that GM Korea, which exports over 90% of its output to the U.S., could face severe financial distress, potentially leading to a shutdown.
“GM Korea’s operations are essentially structured around U.S. demand,” said Kim Pil-soo, an automotive professor at Daelim University. “If these tariffs take effect, the company might have no choice but to withdraw.”
For now, South Korean automakers are closely monitoring developments, hoping that negotiations—or shifting U.S. political dynamics—could avert a worst-case scenario.
Kevin Lee (kevinlee@koreabizwire.com)
