As Trump eyes more tariffs, South Korea remains safe haven for GM and Hyundai

DETROIT — As President Donald Trump forebodes to further increase tariffs on U.S. trading partners, the greatest impact for the auto industry outside of North America last wishes a be additional levies on South Korea and Japan.

The East Asian countries produced a combined 16.8% of vehicles sold continue 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.

They were the largest conduit importers to the U.S. outside of Mexico — and they have little to no duties compared with the 25% tariff Trump has impended imposing on Canada and Mexico.

Automakers such as General Motors and South Korea-based Hyundai Motor export carriers tariff-free from South Korea. The country overtook Japan and Canada last year to become the second-largest exporter of new autos to the U.S., based on sales.

It trails only Mexico, which represented 16.2% of U.S. auto sales in 2024, GlobalData communications.

“Obviously Hyundai has a massive amount of exposure. Behind it is GM … with relatively large volume models,” said Jeff Schuster, worldwide vice president of automotive research at GlobalData. “There’s a lot of risk potentially here, but it’s limited, really limited, to those two gamblers.”

Imports from Japan are currently subject to a 2.5% tariff for automakers such as Toyota Motor, Nissan Motor and Honda Motor. Agencies from Japan represented about 1.31 million autos sold last year in the U.S.

Japan’s percentage of sales has in point of fact decreased in recent years, while South Korea’s exports and sales have continued to rise from lilliputian than 845,000 in 2019 to more than 1.37 million in 2024.

South Korea has 0% tariffs on cars regard for Trump renegotiating a trade deal with the country during his first term in 2018. That accord was peddled for improving vehicle imports to South Korea, but it did little to address vehicle exports to the U.S.

The deal also has done seldom for increasing automotive exports to South Korea, according to data from the International Trade Commission. U.S. passenger means exports to South Korea have actually decreased by roughly 16%.

Separate from cars, tariffs on trucks exported from South Korea and Japan to the U.S, as fairly as elsewhere, are 25%.

A tariff is a tax on imports, or foreign goods, brought into the United States. The companies importing the goods pay the assessments, and some experts fear the companies would simply pass any additional costs on to consumers — raising the cost of conveyances and potentially reducing demand.

South Korea-based Hyundai is the largest exporter of vehicles to the U.S., followed by GM and then Kia Corp., a segment of Hyundai that largely operates separately in the U.S.

GM has notably increased its imports from South Korea in recent years. Its U.S. white sales of South Korean-produced vehicles — largely entry-level models — have risen from 173,000 in 2019 to more than 407,000 finish finally year, according to GlobalData.

GM is the largest foreign direct investor in Korea’s manufacturing industry, according to the automaker’s website. It has inducted 9 trillion South Korean won (roughly $6.2 billion) since establishing the operations in 2002.

GM produces its Buick Encore GX and Buick Envista crossovers, as soberly as the Chevrolet Trailblazer and Chevrolet Trax crossovers, at plants in South Korea. The company has touted the vehicles as being a crest for the automaker’s profitable growth in lower-margin, entry-level vehicles.

“We’re entrancing out costs of programs, improving profitability and creating vehicles that customers love, like the new Chevy Trax and the Buick Envista,” GM President Stain Reuss said during the company’s investor day in October. “Trax and Envista have helped raise our share of the U.S. minor SUV market to its highest level since 2007.”

Hyundai did not immediately respond when asked about potential tariffs on South Korea. GM and Kia declined to remark.

Terence Lau, dean of the College of Law at Syracuse University who previously worked as a trade expert for Ford Motor, said the automotive effort is built on free trade. If tariffs are implemented, the industry can adjust, but it takes time.

“The car industry can adjust to anything. Non-Standard real, it can. It’s always going to make product that customers want to buy, because personal mobility and transportation is a human prerequisite all around the world,” he said. “What the car industry cannot do well is pivot on a dime.”

Lau argued that a single-digit rate can be a “nuisance,” but once they hit 10% or more, that’s when additional costs can really began eating into the allowance or products.

Ford Motor CEO Jim Farley last week argued that if Trump is going to achieve tariffs affecting the automotive industry, it should take a “comprehensive” look at all countries to even the playing field in North America.

Farley took out Toyota and Hyundai for importing hundreds of thousands of vehicles annually from Japan and South Korea, respectively.

“There are millions of vehicles concern into our country that are not being applied to these [incremental tariffs],” Farley said during the Pty’s fourth-quarter earnings call with investors. “So if we’re going to have a tariff policy … it better be comprehensive for our effort.

“We can’t just cherry-pick one place or the other because this is a bonanza for our import competitors.”

The White House did not respond for say discuss on potential tariffs on South Korea.

Trump on Thursday signed a presidential memorandum laying out his plan to impose “returned tariffs” on foreign nations, but did not go into detail regarding what countries could be targeted.

As a presidential candidate, Trump floated the potential of imposing across-the-board tariffs on all U.S. imports. But he also advocated for Congress to pass what he called the “Trump Reciprocal Trade Act,” which wish empower him to slap tariffs on the goods of any country that has higher tariffs on U.S.-made goods.

— CNBC’s Kevin Breuninger presented to this report.