APEC summit critical to mitigate Hyundai Motor’s US tariff risk

Hyundai Motor's IONIQ 9 electric SUV / Courtesy of Hyundai Motor

Hyundai Motor Group finds itself at a pivotal moment ahead of the upcoming Asia-Pacific Economic Cooperation (APEC) Economic Leaders' Meeting, as the event may serve as a major catalyst to ease the carmaker’s mounting tariff burden in the United States.

The Korean carmaker continues to shoulder a massive financial burden from the 25 percent tariff imposed on its U.S. operations, even months after Korea and the U.S. agreed in July to lower the rate to 15 percent. Washington is continuing to impose the 25 percent rate on Korean auto imports, as the two countries have yet to finalize a detailed agreement.

The status quo leaves Hyundai Motor Group’s two key auto brands — Hyundai Motor and Kia — highly vulnerable to the external uncertainty, as the U.S. is their largest export market.

According to data from market tracker, FnGuide, Hyundai Motor’s operating profit in the third quarter is forecast to reach 2.6 trillion won ($1.83 billion), down 27 percent from the previous year. Kia's is also estimated to fall 27 percent to 2.3 trillion won during the same period.

Korea hopes to finalize the long-delayed trade deal on the sidelines of the APEC summit in Gyeongju, North Gyeongsang Province, as President Lee Jae Myung is set to hold a second meeting with his U.S. counterpart Donald Trump during the event, slated for Oct. 31 and Nov. 1.

Top-ranking bureaucrats from the Korean government have traveled to the U.S. to narrow their lingering differences on the unsettled trade deal. Both countries remain divided on the form and target of Korea’s $350 billion U.S. investment fund.

Kim Yong-beom, presidential chief of staff for policy, speaks during a media briefing at the presidential office in Seoul, Oct. 1. Yonhap

In search of a breakthrough, Kim Yong-beom, presidential chief of staff for policy, and Industry Minister Kim Jung-kwan will travel to Washington Thursday for talks with U.S. Commerce Secretary Howard Lutnick. Korea’s Trade Minister Yeo Han-koo already departed for the U.S. on Tuesday.

Finance Minister Koo Yun-cheol also departed for the U.S. on Wednesday, and plans to meet with U.S. Treasury Secretary Scott Bessent.

“We will explain in detail Korea’s circumstance (regarding the trade negotiation with the U.S.),” Koo told reporters before departing from Incheon International Airport.

If the two sides successfully narrow their gap, they are expected to finalize the detailed trade agreement by the end of this month, when the Lee and Trump hold their second meeting.

That would present a best-case scenario for Hyundai Motor Group, as its major rivals — such as Toyota Motor and most European automakers — are already subject to a reduced 15 percent tariff in the U.S.

Industry officials also believe that the upcoming APEC summit will be a major turning point for Hyundai Motor Group.

“Hyundai Motor Group is in dire need to overcome the tariff shock, so it does not lose its momentum for growth in the U.S.,” an auto industry official said. “The upcoming APEC summit will serve as a critical momentum to determine the fate of the carmaker.”