U.S. President Donald Trump’s recent threat to impose steep tariffs on imported vehicles has sent shockwaves through Ulsan. (Image courtesy of Yonhap)
ULSAN, Feb. 25 (Korea Bizwire) — U.S. President Donald Trump’s recent threat to impose steep tariffs on imported vehicles has sent shockwaves through Ulsan, South Korea’s automotive manufacturing powerhouse, where cars account for nearly a third of the city’s exports and form the backbone of the local economy.
According to data from the Korea International Trade Association’s Ulsan branch, the city’s automotive exports reached $27.4 billion in 2024, representing 31% of its total exports of $88.1 billion. This figure surpasses other key exports including petroleum products (27.5%), petrochemicals (12%), and ships (8%).
The United States is particularly crucial for Ulsan’s automotive sector, accounting for $15 billion, or 55%, of the city’s total car exports. The significance of this trade relationship is further highlighted by the fact that automotive exports make up 64% of Ulsan’s total exports to the United States, which reached $23.4 billion last year.
This success has been largely attributed to the zero-tariff arrangement under the Korea-U.S. Free Trade Agreement, which has helped maintain Korean vehicles’ price competitiveness in the American market.
Trump’s proposal to impose tariffs of up to 25% on imported vehicles could deliver a severe blow to Ulsan’s already weakening economy. In January, the city’s exports fell 16.6% year-on-year to $6.4 billion, with automotive exports plunging 26.9% to $1.9 billion amid weakening demand for both conventional and electric vehicles.
The impact could extend far beyond Hyundai Motor’s main production facility in Ulsan, affecting numerous suppliers and related industries throughout the region. The proposed tariffs would affect not only the largest automotive manufacturing plant in South Korea but also the extensive network of suppliers and associated businesses that depend on the industry.
However, amid these concerns, there’s a silver lining for another of Ulsan’s key industries. HD Hyundai Heavy Industries, the city’s major shipbuilder, could potentially benefit from Trump’s policies favoring allied nations for naval vessel construction and an increased focus on ship maintenance, repair, and operations (MRO) contracts.
Industry observers note that South Korea holds a competitive advantage over Japan in terms of shipbuilding capacity, making it a strong contender for potential U.S. naval construction contracts.
“Smaller companies are particularly vulnerable to changes in trade conditions,” said a city official. “We’re focusing on supporting small and medium-sized enterprises through market diversification and technological development to build resilience against such challenges, as these types of trade tensions could recur in the future.”
Choi Jin-hyuk, head of economic affairs at the Ulsan Chamber of Commerce and Industry, emphasized the importance of securing exemptions for companies investing in the United States.
“We hope the current Korean economic delegation in the U.S. can achieve meaningful results through negotiations,” he said. “The government should pursue measures such as securing tariff exemptions for companies with existing investments in the United States.”
Kevin Lee (kevinlee@koreabizwire.com)
