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Photo = Hyundai Motor Group |
[Alpha Biz= Paul Lee] U.S. President Donald Trump said on his social media account that he would reverse the trade agreement with South Korea and raise tariffs across the board to 25%, throwing South Korea’s industrial sector into confusion on the 27th.
Following the official announcement in November last year that tariffs on exports to the U.S. would be reduced, most Korean companies had already finalized their business plans for this year based on a 15% tariff rate. If tariffs are raised by an additional 10 percentage points, companies are expected to face renewed uncertainty, including the need to adjust production volumes in Korea. Business circles are increasingly calling on the government to engage with the U.S. as soon as possible to ease the confusion.
Hyundai Motor Group was among the most alarmed by Trump’s tariff warning. The group previously struggled in the U.S. market for about seven months, from April last year—when a 25% reciprocal tariff was imposed—until the rate was lowered to 15% in November. During earnings calls for the third quarter of last year (July–September), Hyundai Motor and Kia disclosed that the two companies incurred a combined additional cost of 3 trillion won in the third quarter alone due to the 25% tariff.
The investment community estimates that if tariffs on automobile exports to the U.S. return to 25%, Hyundai Motor Group could face additional annual costs exceeding 5 trillion won. Meritz Securities projects that a 10 percentage-point tariff increase would result in additional costs of 3.1 trillion won for Hyundai Motor and 2.2 trillion won for Kia. Hana Securities estimates the total burden at 4.3 trillion won. NICE Credit Rating previously forecast that applying a 25% tariff instead of 15% would impose an additional 3.1 trillion won burden on the group. Even if price hikes in the U.S. market are kept to a minimum to defend revenue, operating profit is expected to decline by more than 20%, according to a consensus among analysts.
Hyundai Motor Group has yet to announce concrete countermeasures. Chairman Chung Euisun and Vice Chairman Jang Jae-hoon have departed for Canada to support a next-generation submarine project bid. The company said it is closely monitoring developments in cooperation with the Korean government, including whether the tariff hike will actually be implemented.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
