DETROIT \u2014 As President\u00a0Donald Trump\u00a0threatens to further\u00a0increase tariffs on U.S. trading partners, the greatest impact for the auto industry outside of North America would be additional levies on South Korea and Japan.<\/p>\n
The East Asian countries produced a combined 16.8% of vehicles sold last year in the U.S., including a record 8.6% from South Korea and 8.2% from Japan, according to data provided to CNBC by GlobalData.<\/p>\n
They were the largest vehicle importers to the U.S. outside of Mexico \u2014 and they have little to no duties compared with the 25% tariff Trump has threatened\u00a0imposing on Canada and Mexico.<\/p>\n
Automakers such as\u00a0General Motors\u00a0and South Korea-based\u00a0Hyundai Motor\u00a0export vehicles tariff-free from South Korea. The country overtook Japan and Canada last year to become the second-largest exporter of new cars to the U.S., based on sales.<\/p>\n
It trails only Mexico, which represented 16.2% of U.S. auto sales in 2024, GlobalData reports.<\/p>\n
\u201cObviously Hyundai has a massive amount of exposure. Behind it is GM \u2026 with relatively large volume models,\u201d said Jeff Schuster, global vice president of automotive research at GlobalData. \u201cThere\u2019s a lot of risk potentially here, but it\u2019s limited, really limited, to those two players.\u201d<\/p>\n
Imports from Japan are currently subject to a 2.5% tariff for automakers such as\u00a0Toyota Motor,\u00a0Nissan Motor\u00a0and\u00a0Honda Motor. Vehicles from Japan represented about 1.31 million autos sold last year in the U.S.<\/p>\n
Japan\u2019s percentage of sales has actually decreased in recent years, while South Korea\u2019s exports and sales have continued to rise from less than 845,000 in 2019 to more than 1.37 million in 2024.<\/p>\n
South Korea has 0% tariffs on cars despite Trump renegotiating a trade deal with the country during his first term in 2018. That accord was touted for improving vehicle imports to South Korea, but it did little to address vehicle exports to the U.S.<\/p>\n
The deal also has done little for increasing automotive exports to South Korea, according to data from\u00a0the International Trade Commission.\u00a0U.S. passenger vehicle exports to South Korea have actually decreased by roughly 16%.<\/p>\n
Separate from cars, tariffs on trucks exported from South Korea and Japan to the U.S, as well as elsewhere, are 25%.<\/p>\n
A tariff is a tax on imports, or foreign goods, brought into the United States. The companies importing the goods pay the tariffs, and some experts fear the companies would simply pass any additional costs on to consumers \u2014 raising the cost of vehicles and potentially reducing demand.<\/p>\n
South Korea-based Hyundai is the largest exporter of vehicles to the U.S., followed by GM and then Kia Corp., a part of Hyundai that largely operates separately in the U.S.<\/p>\n
GM has notably increased its imports from South Korea in recent years. Its U.S. sales of South Korean-produced vehicles \u2014 largely entry-level models \u2014 have risen from 173,000 in 2019 to more than 407,000 last year, according to GlobalData.<\/p>\n
GM is the largest foreign direct investor in Korea\u2019s manufacturing industry, according to\u00a0the automaker\u2019s website.\u00a0It has invested 9 trillion South Korean won (roughly $6.2 billion) since establishing the operations in 2002.<\/p>\n
GM produces its\u00a0Buick Encore GX and Buick Envista\u00a0crossovers, as well as the Chevrolet Trailblazer and Chevrolet Trax crossovers, at plants in South Korea. The company has touted the vehicles as being a pinnacle for the automaker\u2019s profitable growth in lower-margin, entry-level vehicles.<\/p>\n
\u201cWe\u2019re taking out costs of programs, improving profitability and creating vehicles that customers love, like the new Chevy Trax and the Buick Envista,\u201d GM President Mark Reuss said during the company\u2019s\u00a0investor day in October.\u00a0\u201cTrax and Envista have helped raise our share of the U.S. small SUV market to its highest level since 2007.\u201d<\/p>\n
Hyundai did not immediately respond when asked about potential tariffs on South Korea.\u00a0GM and Kia declined to comment.<\/p>\n
Terence Lau, dean of the College of Law at Syracuse University who previously worked as a trade expert for\u00a0Ford Motor, said the automotive industry is built on free trade. If tariffs are implemented, the industry can adjust, but it takes time.<\/p>\n
\u201cThe car industry can adjust to anything. Really, it can. It\u2019s always going to make product that customers want to buy, because personal mobility and transportation is a human need all around the world,\u201d he said. \u201cWhat the car industry cannot do well is pivot on a dime.\u201d<\/p>\n
Lau argued that a single-digit tariff can be a \u201cnuisance,\u201d but once they hit 10% or more, that\u2019s when additional costs can really began eating into the margin or products.<\/p>\n
Ford Motor\u00a0CEO Jim Farley last week argued that if Trump is going to implement tariffs affecting the automotive industry, it should\u00a0take a \u201ccomprehensive\u201d look\u00a0at all countries to even the playing field in North America.<\/p>\n
Farley singled out Toyota and Hyundai for importing hundreds of thousands of vehicles annually from Japan and South Korea, respectively.<\/p>\n
\u201cThere are millions of vehicles coming into our country that are not being applied to these [incremental tariffs],\u201d Farley said during the company\u2019s fourth-quarter earnings call with investors. \u201cSo if we\u2019re going to have a tariff policy \u2026 it better be comprehensive for our industry.<\/p>\n
\u201cWe can\u2019t just cherry-pick one place or the other because this is a bonanza for our import competitors.\u201d<\/p>\n
The White House did not respond for comment on potential tariffs on South Korea.<\/p>\n
Trump on Thursday\u00a0signed a presidential memorandum\u00a0laying out his plan to impose \u201creciprocal tariffs\u201d on foreign nations, but did not go into detail regarding what countries could be targeted.<\/p>\n
As a presidential candidate, Trump floated the possibility of imposing across-the-board tariffs on all U.S. imports. But he also advocated for Congress to pass what he called the \u201cTrump Reciprocal Trade Act,\u201d which would empower him to slap tariffs on the goods of any country that has higher tariffs on U.S.-made goods.<\/p>\n
\u2014 CNBC\u2019s\u00a0<\/em>Kevin Breuninger<\/em>\u00a0contributed to this report.<\/em><\/p>\n<\/p>\n DETROIT \u2014 As President\u00a0Donald Trump\u00a0threatens to further\u00a0increase tariffs on U.S. trading partners, the greatest impact for the auto industry outside of North America would be additional levies on South Korea and Japan. The East Asian countries produced a combined 16.8% of vehicles sold last year in the U.S., including a record 8.6% from South Korea […]<\/p>\n","protected":false},"author":0,"featured_media":14974,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-14973","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/14973","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=14973"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/14973\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/14974"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=14973"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=14973"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=14973"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}