Hyundai and Kia face limited gains from US tariff rollback, despite recent policy shifts announced by former US President Donald Trump. On Tuesday, Trump signed an executive order partially reversing auto parts tariffs set to take effect on May 3. While the rollback lowers some tax pressures, Korean automakers expect only modest relief. Industry sources say the move primarily benefits American carmakers like GM and Ford. Korean firms, meanwhile, still face high costs and structural disadvantages in the US market.
Trump’s new order allows cars assembled in the US to receive offset credits equal to 3.75 percent of their price. This incentive applies to vehicles made before May 1, 2026. After that date, the credit falls to 2.5 percent. If a vehicle costs $100,000, the maximum offset would be $3,750 under the current rule. But the broader 25 percent tariff on fully assembled vehicles remains unchanged, limiting the overall impact.
Hyundai and Kia face limited gains from US tariff rollback due to how the exemption interacts with existing steel and aluminum duties. The latest directive clarifies that tariffs on auto parts will not stack with those on steel-based components. This prevents double taxation, but still keeps the 25 percent duty in place for steel and aluminum goods. According to the Korea International Trade Association, 23 tariff-targeted auto items overlap with metals. This overlap previously sparked concerns over a potential 50 percent effective rate.
However, experts believe this partial relief serves domestic manufacturers first. Professor Kim Pil-su of Daelim University said Trump aimed to ease pressure on GM, Ford, and Stellantis. These firms rely heavily on Canada and Mexico for parts. Both countries secured full tariff exemptions, giving US automakers a clear edge. Hyundai and Kia, in contrast, lack equivalent supplier networks in North America.
Relocating supply chains poses another challenge for Korean automakers. They often move first-tier suppliers when expanding abroad. But lower-tier parts like bolts and nuts remain harder to replace. These smaller components, subject to steel and aluminum duties, still cost more in the US. Sourcing them locally adds significant expense, said industry officials familiar with procurement logistics.
Hyundai Mobis, the group’s auto parts arm, continues expanding its operations in the US. It produces key components like battery and chassis modules. The company also works closely with Korean firms to localize minor parts sourcing. However, full localization remains difficult, especially for niche components. High US production costs further strain competitiveness for imported brands.
Hyundai and Kia face limited gains from US tariff rollback even as their US sales reach new heights. In April, Hyundai sold 74,805 units, up 13.8 percent year-on-year. Kia also recorded strong figures, moving 87,810 units — an 18.5 percent increase. Analysts attribute these gains to aggressive sales campaigns and pre-tariff price controls. Both companies moved inventory quickly to avoid future cost hikes.
Still, long-term risks persist. Korean automakers must contend with rising production costs and regulatory uncertainty in the US. Domestic rivals continue to benefit from friendlier trade terms and established networks. Without deeper reform or exemptions, Korean carmakers may struggle to compete. As one industry official said, structural disadvantages will not disappear with a single policy tweak.
