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Key takeaways

  • Hyundai and General Motors are benefiting from the reduction of U.S. import duties on cars from South Korea.
  • Although the cut in tariffs to 15 percent is welcome, it will not fully offset the initial financial impact these carmakers are expecting.
  • Hyundai and GM remain heavily dependent on vehicle imports from South Korea, despite efforts to ramp up local production.

Hyundai Motor and General Motors are benefiting from a reduction in U.S. import duties on cars from South Korea, reports CNBC. These automakers were hit hard by the 25 percent tariffs imposed earlier this year by the Trump administration.

Lower tariffs

Hyundai, the largest U.S. importer of new vehicles from South Korea, said the tariffs cost the company 1.2 billion dollars (1 billion euros) in the third quarter alone. GM, which also imports a large number of vehicles from South Korea, has estimated its tariff burden at 3.5 billion to 4.5 billion dollars (3 to 3.9 billion euros) between now and 2025.

The recent announcement by the Trump administration to cut tariffs on certain products, including vehicles from South Korea, to 15 percent will provide relief for both companies. GM CFO Paul Jacobson noted that while the reduction is positive, it will not fully offset the initial forecast of 2 billion dollars (1.7 billion euros) in tariffs. He expects the impact in 2026 to be closer to 1 billion dollars (860 million euros) or less.

Randy Parker, CEO of Hyundai North America, agrees that although a 15 percent tariff is still substantial, the reduction from 25 percent is a welcome step. The tariff cut follows South Korea’s pledge to invest 350 billion dollars (300 billion euros) in the U.S. over a period of several years, underscoring the strengthening economic partnership between the two nations.

Reliance on imports

Despite the tariffs in place, Hyundai and GM remain heavily reliant on car imports from South Korea. Hyundai aims to increase local production in the U.S. to 80 percent by 2030, but currently depends on imports for a significant share of its sales. GM, known for building popular entry-level crossovers at its South Korean plants, has seen U.S. sales of these imported vehicles rise sharply in recent years.

The new trade agreement is a positive development after a period of tension between the two countries following a raid targeting immigrants at a battery factory in Georgia, which was jointly owned by GM.

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