Korean industries becoming resilient against Trump's tariff tantrums

Export-bound cars are parked at Pyeongtaek port in Gyeonggi Province, Tuesday. Yonhap

Despite U.S. President Donald Trump’s threat Monday (local time) to impose fresh tariffs, adding uncertainty for Korean industries, the country’s industrial sector and stock market showed signs of growing resilience to trade pressure from Washington.

Analysts and industry officials said Tuesday the latest threat is likely to be resolved in the short term, noting that Trump took issue with the slow progress in implementing the Korea-U.S. trade agreement, which depends on the domestic Korean political process.

Industry sources said companies increasingly share the view that the more they respond to tariff issues, the worse the situation tends to become, adding that tariff-related uncertainty has effectively become the new norm in their operations.

Trump said in a Truth Social post that he is raising auto tariffs and other "reciprocal" tariffs on Korea to 25 percent from 15 percent, claiming that the Korean legislature has not yet completed the process to implement the countries' bilateral trade deal reached last November.

U.S. President Donald Trump's Truth Social posting / Captured from Truth Social

Following Trump’s announcement, the stock prices of Hyundai Motor and Kia fell about 5 percent during Tuesday’s trading session but recovered much of the losses in the afternoon, closing 0.81 percent and 1.1 percent lower than the previous session, respectively.

The benchmark KOSPI also started lower but went on to hit a new intraday record high during the session and closed at 5,084.85 points, marking the first time it has finished above the 5,000 level.

“The KOSPI seems to be getting used to TACO,” Shinhan Investment & Securities analyst Lee Jae-won said, referring to the phrase “Trump Always Chickens Out.”

Meritz Securities analyst Kim Joon-sung estimated that a 10 percentage point increase in auto tariffs would result in additional operating costs of 3.1 trillion won ($2.14 billion) for Hyundai Motor and 2.2 trillion won for Kia, potentially cutting their 2026 operating profits by about 23 percent and 21 percent, respectively.

However, he stressed that “the issue is ultimately a matter of time before it is resolved,” adding that he expects auto tariffs to return to 15 percent soon.

“As noted in Trump’s post, the Korea-U.S. trade agreement has already been agreed between the presidents,” he said. “Even if there were procedural issues in the National Assembly, it is ultimately only a matter of time before they are addressed.”

Korea Investment & Securities analyst Kim Chang-ho said uncertainty could grow over the possibility that a 25 percent tariff may again be applied solely to Korean-made vehicles, as was the case last year. However, if Trump’s stated rationale holds, there is a high likelihood the tariff could revert to 15 percent, depending on the pace of policy decisions and approval by Korea’s National Assembly, he said.

Officials at Hana Bank celebrate at the bank's dealing room in Jung District, Seoul, Tuesday, as the benchmark KOSPI closed above a 5,000-point mark for the first time. Korea Times photo by Shim Hyun-chul

Industry officials also said they expect the fresh tariff pressure would be addressed because the issue can be resolved by the Korean government and the National Assembly.

“Based on Trump’s post alone, he has already laid out a path on how to resolve the issue,” an official from a conglomerate said. “Passing relevant laws through the National Assembly is not an impossible task, and there is no fixed deadline, so I expect it can be resolved soon.”

Another industry official said Trump has frequently made surprise remarks related to tariffs, which should be viewed separately from what is actually implemented legally or administratively.

Korea’s presidential office Cheong Wa Dae also said that the tariff hikes only take effect after administrative procedures such as notice in the Federal Register.

“What companies have learned so far is that the situation tends to become a problem regardless of whether they respond to Trump’s tariff pressure or not,” a second conglomerate official said.

“If an industry says a certain sector is heavily affected by tariffs, pressure tends to concentrate there, while if it says there is little impact, there are moves to impose even more tariffs … From the perspective of individual companies, there is effectively little they can do, and in the end, taking no action until certain rules are finalized has become the best option,” the official added.

Hyundai Motor Group declined to comment on the issue, saying, “We are closely monitoring the progress.”

Several companies in the biopharmaceutical sector, which was also mentioned in Trump’s post, similarly said they are keeping a close watch on developments.

Celltrion issued a letter to shareholders on Tuesday that it has "established a fundamental solution to these tariff concerns by securing the Branchburg production facility in New Jersey, U.S."