Trump’s tariff cuts in South Korea are a big boost for Hyundai and General Motors

Detroit – Hyundai Motor W GM They are set to be among the biggest beneficiaries of lower US tariffs on imports, including vehicles, from South Korea.

The South Korea-based automaker is the largest U.S. importer of new vehicles from the country, followed by General Motors. The two automakers have paid billions of dollars in tariffs so far this year after President Donald Trump imposed 25% tariffs on cars imported from South Korea and other countries in the spring.

The Trump administration last week confirmed plans to reduce tariffs on some products, including vehicles, to 15% from South Korea. A notice of implementation of the trade deal was published Wednesday in the Federal Register. Other countries such as Japan and the United Kingdom have also negotiated lower tariff rates with the Trump administration.

Before the cut, Hyundai said U.S. tariffs cost the company 1.8 trillion won ($1.2 billion) in the third quarter, up from 828 billion won ($565 million) in the previous quarter. GM recently said the impacts of the tariffs, mostly from South Korea and Mexico, are expected to be between $3.5 billion and $4.5 billion in 2025.

GM Chief Financial Officer Paul Jacobson said Wednesday that the automaker initially expected tariffs on South Korean imports to be $2 billion, but the company has been able to offset many of those costs. GM expects the tariffs to cost roughly $1 billion or less in 2026, he said.

“We think this will be a tailwind next year, but not the full 50%, because the final tariff bill we’ll pay this year for Korea will be well below the $2 billion of things we’ve been working on,” Jacobson said during the UBS conference.

The US tariff announcement comes after South Korea formally introduced legislation in its parliament aimed at fulfilling its promise to invest $350 billion to the United States over several years.

“Korea’s commitment to American investment strengthens our economic partnership, local jobs and industry. We are also grateful for the deep trust between our two countries,” US Commerce Secretary Howard Lutnick said in a statement published Monday on X.

Tariffs remain a challenge but are better than 25% as the automaker aims to achieve record U.S. retail sales for a sixth straight year in 2026, said Randy Parker, CEO of Hyundai North America.

“Fifteen percent is still 15 percent,” he told CNBC during a phone interview on Tuesday. “Getting to 15% is a great achievement. It’s been a journey to get to this agreement, which I would say has been quite extensive.”

Hyundai, including its Kia subsidiary that operates separately in the United States, has significantly increased its sales and operations in the United States in recent years. But the automaker continues to import the majority of its cars – estimated at about 1 million units this year – from South Korea.

GlobalData estimates that more than 1.37 million vehicles, or about 8.6% of U.S. sales this year, will be vehicles imported from South Korea — making the country the largest exporter of vehicles sold in the U.S. other than Mexico.

Hyundai is expected to import more than 951,000 vehicles in 2026, according to GlobalData. This includes more than 369,000 vehicles for Kia and 582,000 for Hyundai and its luxury brand, Genesis.

Hyundai said this year that it aims to produce more than 80% of its U.S. vehicle sales locally by 2030. That compares with about 40% currently.

Despite the tariffs, GM is estimated to import approximately 422,000 vehicles from South Korea this year to the United States, according to GlobalData. This represents an increase of 3.6% compared to record imports that exceeded 407 thousand units last year.

GM has increasingly used South Korean factories to produce entry-level crossovers for Chevrolet and Buick. Its U.S. sales of South Korean-produced cars — largely entry-level models — rose from 173,000 cars in 2019 to more than 407,000 cars last year, according to Global Data.

GM said in an emailed statement that the company “appreciates that negotiators have finalized an agreement on trade between the United States and South Korea.”

“GM’s long-standing operations in Korea produce high-quality, affordable crossovers that complement our U.S. vehicles and domestic production, which will soon rise to 2 million units. We will monitor and review details,” GM said.

GM produces its Buick Encore GX and Buick Envista crossovers, as well as the Chevrolet Trailblazer and Chevrolet Trax crossovers, at factories in South Korea. The company has described the vehicles as the pinnacle of the automaker’s profitable growth in low-margin and entry-level vehicles.

The new trade deal between the United States and South Korea comes months after a period of tension between the two countries following an immigration raid at a battery plant jointly owned by Hyundai and LG Energy Solution in Georgia.

About 475 workers, including more than 300 South Koreans, were arrested in the September 4 raid at the factory in Illapelle, Georgia, according to US immigration officials.