Tariffs Imposed on Engines, Transmissions, and Powertrains
Automobiles: Korea's Top Export Item to the U.S.
Inevitable Rise in New Car Prices
U.S. President Donald Trump’s announced 25% tariff on automobiles and major automobile parts officially took effect on the 3rd (local time).
Accordingly, from 12:01 a.m. (Eastern Time) on that day, automobiles and parts produced in Korea will be subject to a 25% tariff when exported to the United States. The parts subject to tariffs include engines, transmissions, powertrains (electric devices), and electrical components. This automobile tariff is one of the item-specific tariffs imposed since President Trump took office.
Earlier, the U.S. imposed a 25% tariff starting from the 12th of last month on steel and aluminum imported from all trading partners, as well as derivative products made from steel and aluminum.
With the automobile tariff coming into effect, disruptions to Korea’s automobile exports are expected. Automobiles are the top export item to the U.S., with Korea’s automobile exports to the U.S. last year totaling $34.744 billion (approximately 51 trillion won). This accounts for nearly half of the global automobile export volume ($70.789 billion), including the U.S. Last year, Hyundai Motor Group (Hyundai and Kia) exported 970,000 units, while Korea GM exported about 410,000 units.
Separately, on the 2nd, President Trump stated that Korea will not be subject to the country-specific reciprocal tariffs with respect to the automobile and parts tariff rate (25%).
Foreign media report that the automobile and parts tariffs will inevitably lead to higher new car prices. The British BBC reported, “Most analysts estimate that the automobile tariff will add thousands of dollars to new car prices in the U.S., and according to Cox Automotive, the average new car price last December was $49,738, a record high,” adding, “Even cars made in the U.S. are likely to see price increases.”
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