Hyundai and Kia are ramping up their U.S. production to sidestep potential tariffs on imported vehicles, a move that could reshape the American automotive landscape.
At a Glance
- Hyundai and Kia plan to increase U.S. auto production to avoid proposed 25% tariffs
- New Hyundai plant in Georgia set to boost domestic production by 70%
- Combined capacity of Hyundai’s U.S. plants could cover up to 80% of U.S. sales
- South Korea’s auto exports could be significantly impacted by the tariffs
- Other automakers, including Nissan, are reconsidering their production strategies
Trump’s Tariff Proposal Sparks Industry Shift
President Donald Trump’s announcement of potential 25% tariffs on imported automobiles has sent shockwaves through the global automotive industry. The proposed measure, aimed at boosting American manufacturing, has prompted swift action from major international automakers, particularly South Korean giants Hyundai and Kia.
“If they have a plant and factory here, there will be no tariff,” President Donald Trump said.
This statement has set the tone for a significant restructuring of production strategies among foreign automakers operating in the U.S. market. Hyundai and Kia, recognizing the potential impact on their bottom line, are taking decisive steps to increase their American manufacturing footprint.
YOU DON'T SAY: Hyundai Motors and Kia aim to boost American automobile production to avoid President Trump’s planned 25 percent auto tariff, according to a report. pic.twitter.com/8ehRKEG7Ak
— Breitbart News (@BreitbartNews) February 21, 2025
Hyundai’s Bold Move: Expanding U.S. Production
At the forefront of this strategic shift is Hyundai’s ambitious plan to boost its domestic production by a staggering 70%. The centerpiece of this initiative is a new plant in Georgia, set to open in March. This facility, combined with Hyundai’s existing Alabama plant, will significantly enhance the company’s U.S. manufacturing capacity.
The expanded production capabilities are expected to cover up to 80% of Hyundai’s U.S. sales, a move that could potentially shield the company from the brunt of the proposed tariffs. This strategic repositioning demonstrates Hyundai’s commitment to the U.S. market and its adaptability in the face of changing trade policies.
Implications for South Korea’s Auto Industry
The potential tariffs pose a significant threat to South Korea’s automotive sector, a crucial component of the country’s economy. Analysts predict that a 25% tariff could reduce South Korea’s auto exports to the U.S. from 27.2% to 18.6%, a substantial decline that could have far-reaching economic consequences.
The situation is particularly dire for GM Korea, which exports 90% of its production to the U.S. Even a reduced tariff of 10% could still result in significant cuts to operating profits for both Hyundai and Kia, underscoring the high stakes involved in this trade policy shift.
Industry-Wide Ripple Effects
The impact of the proposed tariffs extends beyond South Korean automakers. Nissan is reportedly considering relocating production from Mexico to avoid potential tariffs, highlighting the broader implications for the global automotive supply chain. This shift could have significant consequences for automakers currently exporting to the U.S. from Mexico.
As the industry grapples with these potential changes, the move towards increased domestic production in the U.S. could lead to long-term shifts in the global automotive landscape. While challenging in the short term, this could potentially result in a more robust and self-sufficient U.S. auto industry, aligning with the administration’s goals of boosting American manufacturing.
