The recent decision to reduce tariffs on vehicles imported from South Korea is set to save Hyundai and General Motors billions of dollars. The tariff has been lowered from 25% to 15%, a significant decrease that will positively affect import costs for manufacturers such as Hyundai, Kia, Genesis, and GM. This change is particularly impactful as these companies collectively import hundreds of thousands of Korean-built vehicles each year.
Impact of Tariff Reduction
This year, Hyundai plans to import over 950,000 vehicles to the United States. General Motors, while emphasizing its American identity, is also one of the largest importers of vehicles from South Korea, having brought in 407,226 vehicles last year. This figure is projected to rise to 422,000 vehicles in 2024, according to GlobalData.
The tariff cuts implemented by the Trump administration have previously strained automakers’ profits. However, this policy shift is expected to alleviate some of that financial pressure. The reduction is welcomed by GM, which stated, “GM’s long-standing Korea operations produce high-quality, affordable crossovers that complement our U.S. vehicles and domestic production, which will soon rise to 2 million units. We will be monitoring and reviewing the details.”
Hyundai’s Dominance in the Market
Clearly, Hyundai stands to benefit the most from this tariff reduction. The company, along with its brands Kia and Genesis, continues to lead as the most popular Korean automobile brand in the U.S. market. This year’s anticipated imports of 951,000 vehicles mark a decrease from approximately 964,000 in 2023, but nonetheless, Hyundai remains a dominant player.
Despite the good news, Hyundai’s North America chief executive, Randy Parker, expressed caution, stating, “Fifteen percent is still 15%. Getting to 15% is a great milestone. It’s been quite the journey reaching this agreement, which has been, I would say, quite extensive.”
By the end of 2024, it is estimated that around 1.37 million vehicles will have been imported from South Korea to the U.S., placing the country just behind Mexico as the second-largest source of imported cars, accounting for approximately 8.6% of all U.S. vehicle sales.
This tariff reduction marks a significant development in the automotive industry, reshaping the competitive landscape as both Hyundai and GM prepare to capitalize on the new trade environment. The implications for consumers and the broader market will be closely observed in the coming months.
