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.
Comments
Isn’t the Chevrolet Trax being produced in Mexico anyway?
Sure is!
GM Korea is (was ?) going to introduce two new models : a major update to the Trax by the end of this year and a replacement for the Daewoo T200 based models (Spark/Sonic) sometime next year.
The Mexican Trax will also be affected because the update is being engineered in Korea. (The original Trax, called the Opel Mokka, was developed in Germany from the Astra).
They are assembled in 3 plants globally, Korea, Mexico and China. China produces only for Chinese market with Korea producing for the rest of the globe. Korea more for EMEA and Middle East (and Holden Trax as well a Buick Encore) and Mexico for Canada, U.S., Mexico and Latin America. U.S. models come from both Korea and Mexico. My family’s 2018 Trax has a Korea final assembly sticker on the driver door.
Isn’t there a “work around”, where any manufactured item that has a final assembly step in the U.S. will avoid such tariffs? This is how the foreign brands get around it, building such plants in the U.S. and selling that “final assembly” as a job generating benefit. So GM and Ford could do the same, bring in partially assembled vehicles and finishing them locally.
North and South Korea should start right away to work with China and the Russian Federation to rehabilitate the rail link from the South via North Korea, North-East China (formerly called Manchuria) to the Transsibirian Railway (“TransSib”). This would open to the South Korean industry, especially the automobile industry a faster transport to the European market than via ship, and of course to the Russian market, too.
This route would use railways which had already been built at the end of the 19th and the early 20th centuries by Tsarist Russia on its conquest going East, and by the Japanese expansion.
The route would pass via Panmumjon, P’yongyang, the border crossing Sinuiju/Dandong to China, Shenyang over the so-called Changchun Railway up to Harbin, where it would take the original TransSib which linked Chita, Zabaykalsky Krai (Чита́) in straight line to Vladivostok, via Harbin.