South Korean carmakers scramble to cope with US tariffs

South Korean automakers had increasingly come to depend on the US market -- making Donald Trump's decision to slap them with tariffs especially painful. The US applied a 25% levy from April 3, significantly higher than the 15% rate applied to Japanese and European vehicles.

How are companies coping? Our first chart considers Hyundai, which makes traditional, hybrid and electric vehicles at plants in the southern US (including the factory in Georgia where workers were recently detained by immigration officials). It's been ramping up production at those facilities; in May, Hyundai's US production was up more than 50% from a year earlier.

Meanwhile, data from the nation's trade association shows exports to the US have fallen every month in 2025 on a year-on-year basis, even before the tariffs officially kicked in.

To cope, automakers have cut prices on exported vehicles by as much as 10% to retain market share, as our second chart shows.

Our subsequent charts show how the US again became South Korea's key export market for cars. From 2005-2015, there were moments when the Middle East and Europe matched America's importance, but that phenomenon faded. By 2024, the US accounted for a peak of 59% of South Korea's vehicle exports, and it's still the destination for 54% even after tariffs kicked in.

The auto sector accounts for roughly 10% of South Korea’s total exports, compared with 20% for Japan. But Japanese automakers' demand is more diversified, with only 30% of exports directed to the US.

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