Hyundai Motor Group under mounting strain from delay in tariff cut

Headquarters of Hyundai Motor and Kia in Seoul / Courtesy of Hyundai Motor Group

By Lee Min-hyung

• Published Nov 11, 2025 3:09 PM KST

Korea urged to achieve Nov. 1 tariff cut implementation: experts

Hyundai Motor Group faces a mounting earnings strain amid Korea’s lingering discord with the United States over when to implement their recently agreed-upon 15 percent auto tariff.

The delay adds to the growing financial burden of the Korean carmaker, as it is still subject to a 25 percent tariff on cars exported to the U.S.

Later last month during a summit between President Lee Jae Myung and U.S. President Donald Trump, both countries reached a detailed follow-up trade agreement to cut the figure down to 15 percent.

At that time, Korea’s presidential office said both countries’ joint fact sheet — which contains a detailed timeline for the tariff cut — would be released in two to three days.

The schedule, however, has been protracted for about two weeks for no confirmed reasons. This leaves Hyundai Motor and Kia — which rely heavily on exports to the U.S. — exposed to additional earnings losses as they still face the earlier tariff rate of 25 percent.

Korea’s basic stance is to request the U.S. to apply the 15 percent auto tariff retroactively from Nov. 1, but it remains unclear whether the U.S. will accept it.

The local carmakers are in dire need to reduce the tariff at the earliest possible date, as they reported drastic earnings falls for the third quarter. The operating profits of Hyundai Motor and Kia dropped 29 percent and 49 percent in the third quarter, respectively, due largely to the U.S. tariff shock.

Hyundai Motor Group has already suffered bigger tariff-related losses in the U.S., compared with its rival carmakers from Japan and the European Union which face lower tariffs.

The EU clinched its tariff deal with the U.S. on July 27, and the U.S. started applying a reduced tariff of 15 percent to vehicle imports from the region retroactively from Aug. 1. Japan and the U.S. also signed a final tariff agreement on Sept. 4, and Japanese carmakers have paid the reduced 15 percent tariff since Sept. 16.

Korea hopes to follow a similar path of the EU to help Hyundai Motor Group minimize its earnings fall, but the carmaker may end up following the same footsteps of Japan and enduring for longer unless the U.S. accepts Korea’s request for the Nov. 1 tariff cut implementation.

Experts said the Korean government should persuade the U.S. to implement the tariff cut from at least Nov. 1, as Korean carmakers have already been hit harder by the U.S. tariff than their counterparts in the EU and Japan.

“Hyundai Motor Group will escape the worst, once Korea and the U.S. agree to apply the auto tariff cut from Nov. 1, but the carmaker is still at a disadvantage in the U.S. due to the delayed trade agreement, compared with its counterparts from the EU and Japan,” said Lee Ho-geun, an automotive engineering professor at Daeduk University.

It also remains questionable whether Hyundai Motor Group will be able to achieve higher profitability in the U.S. next year relative to European and Japanese carmakers, as Korean carmakers have ended up paying a higher tariff of 2.5 percentage points compared to its competitors in the two regions, according to the professor.

“Japan and the EU are not free trade agreement (FTA) partners with the U.S., and paid a 2.5 percent auto tariff even before their latest trade agreements with the U.S., which was not the case for Korea which was exempt from any auto tariffs there,” Lee said.

Kim Pil-soo, a professor of automotive technology at Daelim University College, also urged Korea not to accept concessions regarding the timeline of the tariff cut implementation.

“Korea should defend the timeline, so Hyundai Motor Group and a number of auto parts makers do not suffer any additional tariff-related losses, as the detailed Korea-U.S. trade agreement was clinched almost two months later than Japan,” Kim said.