Hyundai Motor Group is bracing for US President Donald Trump’s proposed tariffs on automobile imports to the US, underscoring its decadeslong commitment to the all-important market along with revamped strategies to ramp up local production.
Hyundai Motor Company CEO Jose Munoz said in his LinkedIn post on Saturday, “Hyundai Motor Company and our parent company, Hyundai Motor Group, are investing billions of dollars in America and creating tens of thousands of high-paying American jobs. …We also proudly support American communities through our network of 845 Hyundai dealers, 788 Kia dealers and 229 Genesis dealers.”
Munoz also highlighted the role of Hyundai Motor Group Metaplant America in Georgia in expanding its footprint in US manufacturing, noting that the facility produced more than 700,000 vehicles there last year and is expected to create 570,000 jobs nationwide across industries.
“HMG is a key player in industries such as mobility, construction and emerging technologies and has invested $20.5 billion in America,” added Munoz. “We will continue our long-standing commitment to drive growth in America, for Americans, with impactful investments that support communities to prosper.”
Munoz’s message comes a day after Trump announced that tariffs on foreign cars will be applied from April 2. Although he did not specify how high the tariffs would be, industry insiders predict a substantial impact given that a significant number of vehicles sold in the US are produced and exported from South Korea. Since 2016, Korea has leveraged zero percent tariffs on passenger cars as outlined in the bilateral free trade agreement.
According to Bloomberg, imports accounted for approximately half of the US automotive market last year. Hyundai and Kia emerged as the second-largest exporters, with 65 percent of their US sales coming from vehicles imported from Korea.
If Trump levies a 10 percent tariff on Hyundai and Kia, their annual operating profits are projected to decrease by 1.9 trillion won ($1.3 billion) and 2.4 trillion won, respectively, a recent report by KB Securities showed. S&P Global, a credit rating agency, forecast that a 20 percent tariff could reduce the companies’ profits by up to 19 percent.
Following the auto tariff threat, Hyundai Motor and Kia plan to boost local production capacity to 1.1 million units, led by the Georgia plant. The two carmakers’ annual sales volume in the US is approximately 1.7 million units — meaning this expansion will allow them to fulfill more than half of their sales demand directly within the local market. Key models include at least six to seven vehicles, such as the Ioniq 5 and Ioniq 9 electric cars, along with other hybrids.
Experts are concerned the automakers could take the hit from Trump’s tariffs before the expansion plan is complete. Both companies are already facing cost pressures with proposed 25 percent tariffs on aluminum and steel, and Hyundai Motor Group is working to set up a local steel mill in the US through its subsidiary, Hyundai Steel, to mitigate these challenges.
“Hyundai and Kia are committed to expanding their production in the US, however, it will take some time to ramp up their capacity. In the meantime, the deepening uncertainties fueled by the Trump administration could hurt their US operations,” said Kim Pil-su, a car engineering professor at Daelim University. “The Korean government should promptly launch a task force dedicated to address these issues with the US.”
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