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How The 25-Percent U.S. Import Tariff Could Affect GM Korea

Back in May, U.S. President Donald Trump delayed his decision to impose a 25-percent tariff on foreign-made vehicles by six months, bringing the deadline to Wednesday, November 13th. Trump didn’t release an official decision last week, however, and is reportedly planning on delaying the decision by another six months – potentially leaving some vehicle exporters unsure of how to plan for the future.

One automaker that is likely a bit worried about the ramifications of the proposed tariff is GM Korea. The General Motors subsidiary exported a total of 369,000 cars last year, 160,000 of which were sent to the U.S. While Korea may be excluded from the tariff if it were to be imposed, the looming decision still has some GM Korea and Renault-Samsung executives on edge, according to The Korea Times. Hyundai and Kia, which manufacture the vast majority of their vehicles domestically in South Korea, will also be watching the situation with intent and awaiting Trump’s decision.

The proposed tariff, part of the White House’s ongoing trade row with China, was first brought forth in May of last year. Then in February of 2019, the U.S. Commerce Department sent Trump its report on the effects foreign-made vehicles were having on the U.S. Economy and if they posed a danger to the country’s national security by way of threatening one of its core industries. The findings in the inquiry were not disclosed by the Commerce Department.

General Motors Bupyeong plant in South Korea

With the U.S. decision still looming, foreign automakers are gauging the best way to approach the situation, including GM Korea, Hyundai/Kia and others.

“Companies usually come up with the following year’s plan before the end of the year, but they are having difficulties planning 2020, because such a big decision will require a full-scale change of the output plan,” an anonymous source with an unnamed “domestic” Korean automaker told The Korea Times. “It is said that Korean cars are likely to get a waiver from the tariff, but companies have to prepare for the worst, and keeping such a stringent status for more than a year is very exhausting.”

The new Buick Encore GX and Chevrolet Trailblazer will be built in Korea and exported to the U.S., set to be assembled side-by-side at GM Korea’s Bupyeong facility in Incheon, just outside of Seoul. The current Chevrolet Trax and Buick Encore are already built at the Bupyeong plant as well, although the Trax is also exported to the U.S. from GM’s San Luis Potosí plant in Mexico. GM currently exports the Chevrolet Spark subcompact to the U.S. from Korea too, with the hatch built at its Changwon plant in the country. Exports of all these future and current models could be affected if the U.S. did not give South Korea an exemption to the proposed tariff.

Hyundai recently showed its willingness to invest in its American manufacturing operations by announcing it will invest $410 million to build the 2021 Hyundai Santa Cruz pickup truck at its existing plant in Montgomery, Alabama. Furthermore, Hyundai and Kia recently entered a $4-billion USD joint-venture partnership with Aptiv (formerly Delphi) to begin testing self-driving cars in the United States and elsewhere, again underscoring its commitment to the U.S. Korean automotive industry experts believe these ventures from Hyundai and Kia will help Korea in its efforts to receive an exemption from the proposed tariffs.

Trump is expected to make an announcement with regard to the tariffs shortly.

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Sam loves to write and has a passion for auto racing, karting and performance driving of all types.

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Comments

  1. The US and Korea already have a trade agreement

    Reply
    1. Not if a 25 percent is slapped on.

      Reply
  2. The South Korean government is tired of spending so much on Defense and are thinking of asking Trump to withdraw all US troops from their country as they think of being able to work things out with Kim Jong Un which means all vehicles made in South Korea could be collector’s items.

    Reply
    1. South korea just agreed to pay more money for us troops. We should
      Leave korea as they are more than able to defeat north korea.

      Reply
      1. What? As a military Vet you obviously have NO CLUE. More N. Korean BS here and I call YOU out @$$hole.

        Reply
        1. South korea population 2x of north korea 50 to 25 million. North korea is in perpetual famine. Only country where over last 50 years average height has decreased.
          South korean economy 50 times larger, 2 trillion to 40 billion. South korean military is more than capable of defeating north korea handily in any non nuclear conflict.

          Reply
  3. If GM made those vehicles in the US there wouldn’t be an issue.

    Reply
  4. The thing everyone forgets is Kia, Hyundai don’t have deal with the UAW and same with other Foreign manufactures. So if all these people who love the union really wanted to make a point tell congress to make the other car companies that they have to Join the UAW and see how many of those plants close. The UAW doesn’t understand they are not giving the American companies a fair chance to go against the foreign car companies. The UAW just hired a ethics person because of all the corruption. So more wasted money by the UAW.

    Reply
    1. Korean unions are worse than uaw

      Reply
  5. I’m sure there will be nay sayers but here is the bottom line. US market vehicles manufactured by American manufactures need to be built in the US, period, IMHO. Foreign market vehicles can be built anywhere else and if that makes $$ for GM, fine. Again, ANYTHING sold in the US needs to be MADE in the US. Is there ONE foreign manufacturer that make its homeland vehicles here in the US for sale on its home foreign soil?? Enlighten me if I’ve missed something, please. US workers/jobs should never suffer at the hands of any American corporations profits or marketshare, IMHO.

    Reply
    1. The scenario you suggest led to piece of crap cars and a union that destroyed the car industry. It took 30 years to unwind that once the foreign competition came.
      Cars today are safer, last longer amd are better to drive. Do you think that happens without competition?

      Reply
      1. Within the domestic market? Yes…. But not the way you envision.

        Reply
        1. Enlighten me please. The consumer is the winner in this competition.

          Reply
          1. Please, the consumer is not the “winner” when they get a substandard chinese, mexican vehicle. This “competition has destroyed US manufacturing and cost American JOBS on everything, not just Auto’s and all for corporate greed. Now be a good boy and run down to the dollar store so you can buy your $1 POS chinese whatever….

            Reply

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