As President Donald Trump continues to threaten increased tariffs on U.S. trading partners, the most significant impact on the auto industry outside North America would be additional levies on South Korea and Japan.
According to data, these two East Asian nations accounted for a combined 16.8% of vehicles sold in the U.S. last year.
South Korea reached a record 8.6%, while Japan contributed 8.2%. They were the largest vehicle exporters to the U.S. outside of Mexico, benefiting from little to no duties—unlike the 25% tariff Trump has threatened on Canada and Mexico.
Automakers such as General Motors and South Korea-based Hyundai Motor currently export vehicles from South Korea tariff-free.
In fact, South Korea surpassed Japan and Canada last year to become the second-largest exporter of new cars to the U.S. in terms of sales, trailing only Mexico, which accounted for 16.2% of U.S. auto sales in 2024.
“Obviously Hyundai has a massive amount of exposure. Behind it is GM … with relatively large volume models,” said Jeff Schuster, global vice president of automotive research at GlobalData. “There’s a lot of risk potentially here, but it’s limited, really limited, to those two players.”
Currently, vehicles from Japan face a 2.5% tariff, affecting automakers such as Toyota Motor, Nissan Motor, and Honda Motor. Japanese vehicles represented approximately 1.31 million units sold in the U.S. last year.
While Japan’s share of U.S. sales has declined in recent years, South Korea’s exports and sales have grown from under 845,000 in 2019 to over 1.37 million in 2024.
South Korea still enjoys a 0% tariff on cars despite Trump renegotiating a trade deal with the country in 2018. That agreement was promoted as a way to improve vehicle imports into South Korea, but it did little to impact South Korea’s exports to the U.S.
According to the International Trade Commission, the deal has not significantly increased U.S. automotive exports to South Korea. In fact, U.S. passenger vehicle exports to South Korea have declined by approximately 16%.
Beyond cars, the U.S. imposes a 25% tariff on trucks imported from South Korea and Japan, as well as other regions.
A tariff is a tax on imports—foreign goods entering the United States. The importing companies pay these tariffs, and experts warn that automakers could pass these additional costs onto consumers, leading to higher vehicle prices and potentially dampening demand.
GM and Hyundai
Hyundai, based in South Korea, is the largest exporter of vehicles to the U.S., followed by GM and then Kia Corp., a Hyundai affiliate that operates largely independently in the U.S.
GM has significantly increased its South Korean imports in recent years. The automaker’s U.S. sales of South Korean-made vehicles—primarily entry-level models—rose from 173,000 in 2019 to over 407,000 last year.
As the largest foreign direct investor in South Korea’s manufacturing industry, GM has invested 9 trillion South Korean won (approximately $6.2 billion) since launching operations in the country in 2002, according to its website.
GM manufactures models such as the Buick Encore GX, Buick Envista, Chevrolet Trailblazer, and Chevrolet Trax crossovers at its South Korean plants. The company has highlighted these vehicles as key to its growth in the lower-margin, entry-level vehicle segment.
“We’re taking out costs of programs, improving profitability and creating vehicles that customers love, like the new Chevy Trax and the Buick Envista,” GM President Mark Reuss said during an investor event in October. “Trax and Envista have helped raise our share of the U.S. small SUV market to its highest level since 2007.”
Neither GM nor Kia provided comments regarding potential tariffs on South Korea. Hyundai emphasized its U.S. investments, which the company states have totaled $20.5 billion since entering the American market in 1986, but it did not directly address the potential tariffs.
“For nearly four decades, Hyundai has been a driver of American growth and innovation, contributing jobs, economic activity, and investments that have helped Americans prosper.
We welcome the opportunity to work with the new administration to support American manufacturing, protect supply chains, and spur innovation,” Hyundai stated in an email Thursday.
Terence Lau, dean of the College of Law at Syracuse University and former trade expert for Ford Motor, emphasized that the auto industry is built on free trade. While the sector can adapt to tariffs, he cautioned that adjustments take time.
“The car industry can adjust to anything. Really, it can. It’s always going to make products that customers want to buy, because personal mobility and transportation is a human need all around the world,” Lau said. “What the car industry cannot do well is pivot on a dime.”
Lau noted that single-digit tariffs are manageable but warned that rates of 10% or higher could significantly impact profit margins.
Tariff Concerns
Last week, Ford Motor CEO Jim Farley suggested that if Trump moves forward with tariffs affecting the auto industry, they should be applied comprehensively across all countries to ensure a level playing field in North America.
Farley specifically called out Toyota and Hyundai for importing large volumes of vehicles from Japan and South Korea, respectively.
“There are millions of vehicles coming into our country that are not being applied to these [incremental tariffs],” Farley said during Ford’s fourth-quarter earnings call. “So if we’re going to have a tariff policy … it better be comprehensive for our industry.
“We can’t just cherry-pick one place or the other because this is a bonanza for our import competitors.” The White House did not respond to inquiries regarding potential tariffs on South Korea.
On Thursday, Trump signed a presidential memorandum outlining his plan to impose “reciprocal tariffs” on foreign nations, though he did not specify which countries might be affected.
As a presidential candidate, Trump previously proposed broad tariffs on all U.S. imports. He also promoted the “Trump Reciprocal Trade Act,” a measure that would authorize him to impose tariffs on any country with higher tariffs on U.S. goods.