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.
Possible US 25% tariff puts Hyundai, Kia earnings under pressure
Headquarters of Hyundai Motor and Kia in Seoul / Courtesy of Hyundai Motor Group
By Lee Min-hyung
Coupang interim CEO questioned over perjury charges
Hyundai Motor Group is growing increasingly anxious over the possible reinstatement of a 25 percent U.S. tariff on Korean-made vehicles, a move that could cost Hyundai Motor and Kia a combined 11 trillion won ($7.48 billion) annually, according to market estimates.
The renewed trade pressure from Washington comes amid heightened scrutiny of Korea’s investigation into Coupang, a U.S.-headquartered e-commerce firm — a dispute that industry officials and analysts fear could spill over into broader trade measures affecting Korean automakers.
Korean automakers are currently subject to a 15 percent tariff after Seoul and Washington reached a bilateral trade agreement last November. However, the Donald Trump administration has warned it could restore the tariff rate to 25 percent on Korean-made vehicles, citing delays in Korea’s legislative process to implement the deal.
A return to the higher tariff would significantly weigh on Hyundai Motor Group’s earnings. According to Daol Investment & Securities, Hyundai Motor and Kia would face a combined annual cost of about 11 trillion won if the tariff is reinstated. The two companies already posted a combined loss of 7.2 trillion won last year due to the existing tariff burden.
Meanwhile, the U.S. House Judiciary Committee has expressed concern over what it described as Seoul’s “targeting” of Coupang and other American companies. In a letter sent Thursday to Coupang interim CEO Harold Rogers, the committee requested that he appear for a deposition and submit records of communications between the company and Korean authorities.
Rogers appeared Friday for questioning by Korean police for the second time over perjury allegations related to his testimony before the National Assembly in December. He said he would fully cooperate with the investigation.
Coupang interim CEO Harold Rogers appears for police questioning in Seoul, Friday. Yonhap
While Washington has officially framed the potential tariff hike around Korea’s delay in implementing the bilateral agreement, experts say the growing political backlash in the United States over the Coupang case has fueled bilateral tensions.
“It is true that the Korean government has applied excessively heavy regulatory pressure on Coupang over the past several months, which has apparently provoked backlash in the U.S.,” said Choi June-sun, professor emeritus of law at Sungkyunkwan University.
Korea needed to investigate Coupang’s weak data protection practices, but the probe took on a punitive character rather than remaining a strictly regulatory review, he added.
Amid speculation that the Coupang investigation may have contributed to both the committee’s request and the potential tariff hike, a senior government official said Friday that the issue is less a diplomatic dispute than the result of lobbying by a specific company in the U.S. The official added that Congress is responding to concerns raised through Coupang’s lobbying efforts.
Meanwhile, Hyundai Motor Group is preparing contingency measures to cushion the impact of a potential tariff hike, including plans to expand vehicle production in the U.S. and diversify export destinations. However, industry officials warn that the automaker remains vulnerable in the short term due to its heavy reliance on the U.S. market.
As of 2024, shipments to the world’s largest economy accounted for 49.1 percent of Korea’s total auto exports.
Data from Meritz Securities shows that an increase of 10 percentage points in the U.S. auto tariff would reduce operating profit by 23 percent at Hyundai Motor and 21 percent at Kia this year.
“Even if the tariff hike is officially justified on legislative grounds, the broader political atmosphere clearly matters,” an industry official said. “Both automakers would need to fundamentally overhaul their sales and investment strategies if the higher tariff is imposed again.”