Trump’s EU tariff hike puts Hyundai back on edge

Hyundai Motor Group Executive Chair Chung Euisun signs the carmaker's IONIQ 5 electric vehicle produced at Hyundai Motor Group Metaplant America in the U.S. state of Georgia, March 26, 2025. Courtesy of Hyundai Motor Group

Hyundai Motor Group is on high alert after U.S. President Donald Trump abruptly raised tariffs on European Union vehicle imports, heightening concerns the Korean automaker could face similar pressure due to Seoul's refusal to support Washington’s military actions in Iran, experts and industry officials said Monday.

Starting from Monday (local time), the United States began to increase tariffs on passenger cars and trucks imported from the EU to 25 percent, up from the current 15 percent. The move was justified by Trump as a response to what he described as the bloc’s failure to comply with a bilateral trade agreement reached in July last year.

While the measure directly targets European carmakers, market watchers warn that it could set a precedent for similar actions against other U.S. partners, including Korea. They said the scenario is still feasible in light of Seoul’s decision not to participate in the U.S.-led military operations against Iran.

Trump has openly expressed dissatisfaction with allies that declined to support Washington’s request to deploy naval forces to the Strait of Hormuz. Korea’s refusal has also raised concerns that it could face retaliatory economic measures, including renewed tariff pressure on its key export items, such as automobiles.

“The risk is not just about Europe,” an industry official said. “Trump’s EU tariff hike sends a broader message that other allies can face a similar trade retaliation anytime.”

A view of Hyundai Motor Group Metaplant America in the U.S. state of Georgia / Courtesy of Hyundai Motor Group

Hyundai Motor Group is particularly exposed to the heightened risk from Trump’s latest trade pressure on the EU. The Korean carmaker has been subject to an auto tariff of 15 percent in the U.S. since November last year.

The group’s flagship auto brands — Hyundai Motor, Kia and Genesis — may gain a temporary price advantage due to the increased tariff on European vehicles, but the Korean carmakers consider the unpredictable trade landscape in the U.S. a far greater risk.

Hyundai Motor Group has already experienced the impact of shifting U.S. tariff policy. From April to November 2025, its vehicle exports to the United States were subject to a 25 percent tariff, which was lowered to 15 percent last November, after the two countries completed bilateral trade negotiations. Trump’s latest move against the EU, however, raises the possibility that Korean carmakers could fall victim to an increased tariff again.

Experts said Hyundai Motor Group has no choice but to increase localized production in the United States.

“Hyundai Motor Group shared its plan that 80 percent of its U.S. sales can be produced locally by 2030, which is the only way for the carmaker to evade the unceasing tariff risk,” said Kim Pil-soo, a professor of automotive technology at Daelim University.

Others, however, argued that there is a low possibility that the U.S. will impose retaliatory tariffs on Korean vehicles.

“Hyundai Motor Group is expanding its investment in the U.S. by a larger margin than any other carmaker across the globe, so my view is that Washington will not abruptly push for an auto tariff hike on Korean vehicles, even if we cannot rule out the possibility,” said Lee Ho-geun, an automotive engineering professor at Daeduk University.