As Trump ups tariffs, GM and Hyundai increase South Korean imports

DETROIT — As President Donald Trump threatens to additional enhance tariffs on U.S. buying and selling companions, the best impression for the auto trade outdoors of North America can be further levies on South Korea and Japan.

The East Asian nations produced a mixed 16.8% of autos offered final 12 months within the U.S., together with a file 8.6% from South Korea and eight.2% from Japan, based on information offered to CNBC by GlobalData.

They had been the biggest automobile importers to the U.S. outdoors of Mexico — they usually have little to no duties in contrast with the 25% tariff Trump has threatened imposing on Canada and Mexico.

Automakers akin to Basic Motors and South Korea-based Hyundai Motor export autos tariff-free from South Korea. The nation overtook Japan and Canada final 12 months to turn out to be the second-largest exporter of latest vehicles to the U.S., based mostly on gross sales.

It trails solely Mexico, which represented 16.2% of U.S. auto gross sales in 2024, GlobalData studies.

“Clearly Hyundai has an enormous quantity of publicity. Behind it’s GM … with comparatively giant quantity fashions,” stated Jeff Schuster, world vice chairman of automotive analysis at GlobalData. “There’s a whole lot of danger doubtlessly right here, nevertheless it’s restricted, actually restricted, to these two gamers.”

Imports from Japan are presently topic to a 2.5% tariff for automakers akin to Toyota Motor, Nissan Motor and Honda Motor. Automobiles from Japan represented about 1.31 million autos offered final 12 months within the U.S.

Japan’s share of gross sales has really decreased in recent times, whereas South Korea’s exports and gross sales have continued to rise from lower than 845,000 in 2019 to greater than 1.37 million in 2024.

South Korea has 0% tariffs on vehicles regardless of Trump renegotiating a commerce take care of the nation throughout his first time period in 2018. That accord was touted for enhancing automobile imports to South Korea, nevertheless it did little to handle automobile exports to the U.S.

The deal additionally has finished little for growing automotive exports to South Korea, based on information from the Worldwide Commerce Fee. U.S. passenger automobile exports to South Korea have really decreased by roughly 16%.

Separate from vehicles, tariffs on vehicles exported from South Korea and Japan to the U.S, in addition to elsewhere, are 25%.

A tariff is a tax on imports, or international items, introduced into the USA. The businesses importing the products pay the tariffs, and a few specialists worry the businesses would merely go any further prices on to shoppers — elevating the price of autos and doubtlessly decreasing demand.

South Korea-based Hyundai is the biggest exporter of autos to the U.S., adopted by GM after which Kia Corp., part of Hyundai that largely operates individually within the U.S.

GM has notably elevated its imports from South Korea in recent times. Its U.S. gross sales of South Korean-produced autos — largely entry-level fashions — have risen from 173,000 in 2019 to greater than 407,000 final 12 months, based on GlobalData.

GM is the biggest international direct investor in Korea’s manufacturing trade, based on the automaker’s web site. It has invested 9 trillion South Korean gained (roughly $6.2 billion) since establishing the operations in 2002.

GM produces its Buick Encore GX and Buick Envista crossovers, in addition to the Chevrolet Trailblazer and Chevrolet Trax crossovers, at vegetation in South Korea. The corporate has touted the autos as being a pinnacle for the automaker’s worthwhile development in lower-margin, entry-level autos.

“We’re taking out prices of packages, enhancing profitability and creating autos that prospects love, like the brand new Chevy Trax and the Buick Envista,” GM President Mark Reuss stated throughout the firm’s investor day in October. “Trax and Envista have helped increase our share of the U.S. small SUV market to its highest degree since 2007.”

GM and Kia declined to remark when requested about potential tariffs on South Korea. Hyundai touted its operations and investments within the U.S., which the carmaker says have totaled $20.5 billion since coming into the market in 1986, however didn’t instantly touch upon potential tariffs.

“For almost 4 a long time, Hyundai has been a driver of American development and innovation, contributing jobs, financial exercise, and investments which have helped People prosper. We welcome the chance to work with the brand new administration to help American manufacturing, shield provide chains, and spur innovation,” Hyundai stated Thursday in an emailed assertion.

Terence Lau, dean of the Faculty of Regulation at Syracuse College who beforehand labored as a commerce professional for Ford Motor, stated the automotive trade is constructed on free commerce. If tariffs are carried out, the trade can modify, nevertheless it takes time.

“The automotive trade can modify to something. Actually, it could possibly. It is all the time going to make product that prospects need to purchase, as a result of private mobility and transportation is a human want all world wide,” he stated. “What the automotive trade can’t do properly is pivot on a dime.”

Lau argued {that a} single-digit tariff could be a “nuisance,” however as soon as they hit 10% or extra, that is when further prices can actually started consuming into the margin or merchandise.

Ford Motor CEO Jim Farley final week argued that if Trump goes to implement tariffs affecting the automotive trade, it ought to take a “complete” take a look at all nations to even the taking part in discipline in North America.

Farley singled out Toyota and Hyundai for importing lots of of 1000’s of autos yearly from Japan and South Korea, respectively.

“There are hundreds of thousands of autos coming into our nation that aren’t being utilized to those [incremental tariffs],” Farley stated throughout the firm’s fourth-quarter earnings name with traders. “So if we’ll have a tariff coverage … it higher be complete for our trade.

“We won’t simply cherry-pick one place or the opposite as a result of it is a bonanza for our import opponents.”

The White Home didn’t reply for touch upon potential tariffs on South Korea.

Trump on Thursday signed a presidential memorandum laying out his plan to impose “reciprocal tariffs” on international nations, however didn’t go into element relating to what nations may very well be focused.

As a presidential candidate, Trump floated the potential of imposing across-the-board tariffs on all U.S. imports. However he additionally advocated for Congress to go what he known as the “Trump Reciprocal Commerce Act,” which might empower him to slap tariffs on the products of any nation that has greater tariffs on U.S.-made items.

— CNBC’s Kevin Breuninger contributed to this report.