US tariff pressure drags down Kia’s 2025 earnings

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

Kia’s 2025 earnings fell sharply on sustained pressure from a 25 percent auto tariff in the United States, the carmaker said Wednesday.

In a regulatory filing, the carmaker reported solid sales of 114.1 trillion won ($80 billion) last year, up 6.2 percent from the previous year. Its operating profit, however, plunged 28.3 percent to 9 trillion won during the same period.

The earnings fall was widely attributable to the tariffs. The U.S. started imposing the 25 percent tariff on Korean carmakers in April last year, and lowered it down to 15 percent in November following a trade agreement between Seoul and Washington.

Kia ended up reporting a 2025 operating profit fall of 3.09 trillion won.

“We will recover profitability by expanding sales of eco-friendly vehicles, despite lingering challenges from the U.S. tariff and toughening market competition,” an official from Kia said.

The Kia EV2 GT compact electric SUV is unveiled for its world premiere during the media opening of the Brussels Motor Show at Brussels Expo, Jan. 9. AP-Yonhap

The carmaker reported robust sales growth of its eco-friendly vehicles in the fourth quarter. Kia said sales for its hybrid cars jumped 21.3 percent between October and December from a year earlier on positive sales momentum of its hybrid cars, particularly in the U.S.

Kia also unveiled its 2026 earnings guidance of achieving an annual operating profit of 10.2 trillion won. Its sales target this year came in at 122.3 trillion won.

The carmaker shared its updated growth strategy for two key markets — the U.S. and Europe.

In the U.S., Kia will focus on driving dual growth in hybrids and SUVs, powered by new strategic models such as the Telluride SUV and the completely redesigned Seltos compact SUV.

Kia's three-row Telluride SUV / Courtesy of Kia

The carmaker will also strengthen its electric vehicle (EV) leadership in Europe by building a complete EV lineup that encompasses the EV2, EV3, EV4 and EV5.

Up until recently, Kia was expected to jump into an earnings recovery track this year, thanks to the reduced U.S. tariff and strong demand for its hybrid and SUV models there.

However, the plan has hit a snag after U.S. President Donald Trump threatened Tuesday (local time) to reinstate the 25 percent tariff on imports of Korean vehicles, as “Korea’s legislature is not living up to its (trade) deal with the U.S.”

This would be a nightmare scenario for Kia, as the U.S. is the largest export market for the carmaker, along with Hyundai Motor.

According to an estimate from Daol Investment & Securities, a 25 percent tariff from the U.S. would incur an additional loss of 2 trillion won for Kia annually compared to the current 15 percent tariff.