The Trump administration’s second term brings heightened volatility to Korea’s automotive industry tariffs. A temporary reduction from 25% to 15% was secured in 2025, but Trump’s threat to restore the 25% tariff due to delays in commitments creates uncertainty for automakers.
Hyundai and Kia’s record-high revenues in 2025 were impacted by US tariffs. Hyundai’s operating profit decreased by $2.9 billion, while Kia incurred $2.2 billion in tariff-related costs. Despite the tariff reduction to 15%, relief was limited due to inventory levels and timing of application.
Hyundai and Kia are prioritizing price protection in the US market to absorb tariff-related costs internally. This strategy aims to minimize increases in Manufacturer’s Suggested Retail Price and maintain steady prices for key models. Tariffs are seen as a structural variable affecting profitability on a large scale.
Amid tariff uncertainty, Korean production facilities and supplier networks linked to US exports face challenges. Reassessments of asset efficiency and utilization are necessary as the industry grapples with the impact of tariffs on the broader industrial structure. Planning has become increasingly difficult in this environment.
Hyundai and Kia’s production strategies are gradually shifting towards medium-term structural realignment. Policies that demonstrate instability in tariff regimes are influencing decisions on production location and model allocation. Investments in automation and robotics in North American plants aim to enhance structural competitiveness in local production.
A mixed strategy focusing on electrification and hybrids is favored in the North American market to mitigate tariff and demand risks. Korean production is expected to play a complementary role in global supply, but the strategic priority for North American market supply may shift over time. Incremental shifts in production strategies are accumulating, driven by investments already in progress.
Read more at Yahoo Finance: How US trade volatility is reshaping Hyundai and Kia’s production strategy