by Changes in U.S. Tariff Policy
The Trump administration has reduced tariffs on cars imported from South Korea from 25% to 15%. This decision is expected to significantly impact the financial results of automakers, especially those actively importing vehicles from that country.
Main Beneficiaries of the Changes
The most obvious winners are the Korean brands Hyundai, Kia, and Genesis. However, a less obvious but very significant beneficiary is the American concern General Motors. Despite its status as an American manufacturer, GM is one of the largest importers of cars produced in Korea for the U.S. market.
This year, Hyundai is expected to import over 951 thousand vehicles under its brands to the USA. GM plans to import about 422 thousand Korean-made cars, such as the Chevrolet Trax, Trailblazer, Buick Encore GX, and Envista. This is an increase compared to 407 thousand units last year.
“GM’s long-standing Korea operations produce high-quality, affordable crossovers that complement our U.S. vehicles and domestic production, which will soon rise to 2 million units. We will be monitoring and reviewing the details,”
Financial Effect and Company Reactions
The reduction in duties will allow automakers to save billions of dollars. GM has already positively assessed this change. Hyundai representatives also acknowledged the tariff reduction as an important step, although they remain cautious in their assessments.
“Fifteen percent is still 15%. Getting to 15% is a great milestone. It’s been quite the journey reaching this agreement, which has been, I would say, quite extensive.” – Randy Parker, CEO of Hyundai North America.
Scale of Imports and Market Positions
By the end of the year, approximately 1.37 million cars are expected to be imported from South Korea to the USA. This makes the country the second-largest source of imported cars for the American market after Mexico, accounting for about 8.6% of all U.S. sales.
This change in trade policy occurs against the backdrop of a general review of international agreements and could set a precedent for further adjustments in U.S. relations with other trading partners. The impact on the market will be multifaceted: from reducing the final price for consumers on certain models to a possible redistribution of production capacities between countries in the long term. The success of this initiative for the U.S. national industry will depend on whether it promotes growth in domestic production, as GM expects, or simply changes the geography of imports.
