GM Korea has shown its resiliency through rounds of difficult labor union talks, the possibility of bankruptcy and state-conducted due diligence. Ultimately, the entity will live on with a $7 billion bailout package backed by parent automaker, General Motors, and the South Korean run Korean Development Bank.
But, things may turn sour quickly. The Trump administration’s threat of new auto tariffs could knock GM Korea down just as the unit licks its wounds. President Trump’s White House launched an investigation into car and component imports that could turn into a fresh round of tariffs, much like the previous steel and aluminum tariffs.
The United States remains GM Korea’s largest market for exports, according to a Globe and Mail report published on Wednesday. Thus, tariffs could seriously damage plans for restructured GM Korea production and exports if the U.S. slaps South Korea with a proposed 25 percent tariff.
GM plans to produce two new crossovers and a three-cylinder engine in South Korea as part of a commitment to remain in the country for another 10 years and turn its operations around. GM also wants to once again turn Korea into a major export hub, and tariffs could squash such dreams before they’re even put into motion.
One possible solution, if tariffs do come into play, will be to move Chevrolet Trax production to the U.S. However, GM Korea would assemble the complete kits before shipping them to the U.S. for final assembly.