Trump Administration Slashes South Korea Vehicle Tariffs to 15%: Major Boost for Hyundai & GM Imports

U.S. Cuts South Korea Vehicle Tariffs to 15%, Providing Major Relief for Automakers

The Trump administration has announced a significant reduction in tariffs on vehicles imported from South Korea, dropping the rate from 25% to 15%. This move is poised to deliver a substantial financial boost to major automakers like Hyundai Motor and General Motors (GM), who have been heavily impacted by the higher levies imposed earlier this year.

Hyundai, the leading U.S. importer of new vehicles from South Korea, and GM, its close second, have collectively paid billions in tariffs. Hyundai alone reported a staggering 1.8 trillion won ($1.2 billion) in U.S. tariff costs in the third quarter, a sharp increase from the previous quarter's $565 million. GM's tariff impact for 2025, primarily from South Korea and Mexico, was initially projected between $3.5 billion and $4.5 billion. However, GM CFO Paul Jacobson indicated that proactive measures have lowered the expected cost for South Korean imports to closer to $1 billion or less for 2026. This reduction is anticipated to provide a "tailwind" for the company next year.

Context and Commitments

The tariff rate adjustment was officially posted on the Federal Register as part of a new trade deal. This development follows South Korea's legislative move to fulfill its commitment of investing $350 billion in the U.S. over several years, a pledge welcomed by U.S. Commerce Secretary Howard Lutnick, who emphasized strengthened economic partnership and job creation.

While a 15% tariff still presents challenges, as noted by Hyundai North America CEO Randy Parker, it represents a "great milestone" in a complex negotiation journey. Hyundai, including its Kia subsidiary, has significantly expanded its U.S. presence but continues to rely heavily on imports from South Korea, estimated at nearly 1 million units this year. Globally, South Korea is expected to be the second-largest exporter of vehicles to the U.S. this year, after Mexico, with over 1.37 million units. Hyundai aims to ramp up local U.S. production to over 80% of its sales by 2030, a significant jump from its current 40%.

GM's Strategic Imports

Despite the tariffs, GM is projected to import approximately 422,000 vehicles from South Korea this year, a 3.6% increase from last year's record. South Korean plants have become crucial for GM, producing popular entry-level crossovers such as the Buick Encore GX, Buick Envista, Chevrolet Trailblazer, and Chevrolet Trax. These models have been key drivers for GM's profitable growth in the entry-level segment. GM expressed its appreciation for the finalized trade agreement, noting that its "long-standing Korea operations produce high-quality, affordable crossovers that complement our U.S. vehicles and domestic production."

Beyond Tariffs: A Broader Relationship

This trade deal also comes in the wake of recent tensions, including a contentious immigration raid at a joint Hyundai Motor and LG Energy Solution battery plant in Ellabell, Georgia, in September 2025. The incident led to the arrest of 475 workers, over 300 of whom were South Korean nationals. Despite such challenges, the tariff reduction signals a renewed effort to strengthen economic ties between the two nations.