Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Hyundai Motor, GM Korea unlikely to gain much from eased US auto tariff
U.S. President Donald Trump speaks during a rally to mark his 100th day in office at Macomb Community College in Warren, Mich., Tuesday. Reuters-Yonhap
By Lee Min-hyung
Hyundai Motor Group and General Motors (GM) Korea are unlikely to benefit much from the United States’ latest auto tariff relief, as the program is aimed at giving temporary incentives to U.S.-assembled cars only, experts and industry officials said Wednesday.
U.S. President Donald Trump signed a proclamation Tuesday (local time) to give automakers a credit for up to 15-percent of the value of vehicles finished in the U.S. in the first year. The figure goes down to 10 percent in the second year.
The country decided to soften the tariff rule less than a month after it slapped a 25-percent tariff on all automobile imports, beginning April 2.
However, Hyundai Motor, Kia and GM Korea will not be able to enjoy much benefit from the eased tariff rule, according to experts. The three automakers rely heavily on exports to the U.S.
“They still export a huge number of vehicles to the world’s largest economy, and exported cars will not benefit from the latest incentive,” said Lee Ho-geun, an automotive engineering professor at Daeduk University.
The Trump administration is under growing pressure to ease trade tensions with its allies, as concerns mount that upcoming price increases on imported goods could harm U.S. consumers, according to the professor.
“However, the latest move by the U.S. can be of help to Hyundai Motor and Kia from a mid- to long-term viewpoint, as they are on track to increase their auto parts localization there,” Lee said.
The move still bodes well for small- and mid-sized auto parts makers here, as the U.S. plans to impose a similar 25-percent tariff on vehicle component imports starting May 3, meaning they can benefit from the credit when their parts are used in US-assembled cars.
Industry officials said carmakers domestically and internationally are looking to adjust to Trump’s unpredictable rhetoric.
“Carmakers and most manufacturing players here and abroad are aware that they cannot brace themselves adequately for trade uncertainty in the U.S., as the Trump administration keeps changing details on its tariff rules, as evidenced by the latest flip-flop in the auto tariff,” an official from the auto industry said.
Korean firms are continuing to heighten their vigilance to policy changes in the U.S., but are not as worried as they were early this year when tariff fears reached their peak, according to the official.