Will Hyundai and Kia Face Another 4.6 Trillion Won Nightmare? "We Already Finalized This Year's Business Plans," Companies Dismayed

Tariffs Restored to 25% After Just Three Months
Automotive Sector Hit Hard, Hyundai's Growth Stalls
Business Community: "No Way to Respond," Left Powerless
Hyundai and Kia's Operating Profits Estimated to Drop 20%
Billions at Risk for th

Just three months after the Korea-U.S. trade agreement was concluded, President Donald Trump has abruptly announced that he will restore tariffs on Korean products to 25%, sending the industry into a panic.

Hyundai Motor and Kia, which were hit with a tariff shock amounting to 4.6 trillion won in the second and third quarters of last year alone, are now anxiously watching to see if another blow will become a reality. In particular, President Trump's latest remarks are expected to be a major setback not only for Hyundai Motor, which has been enjoying a stock rally thanks to its physical artificial intelligence (AI) vision, but also for the entire industry.

Export companies that had based their business plans for this year on a 15% tariff are now facing the risk of having their production and sales roadmaps rendered meaningless by this sudden New Year's announcement, leaving them helpless.

Companies Helpless in Face of Unilateral Tariff Hike Announcement

According to the business community on January 27, export companies could not hide their frustration at President Trump's surprise tariff hike announcement. An official at one export company said, "We built our business plan assuming a 15% tariff," adding, "If this happens right at the start of the new year, all of our plans for production, investment, and sales will be thrown into disarray."

Regarding how to respond to the tariff policy, the official said, "There is no way," and explained, "If we raise prices and reduce our local market share, we might be able to cut losses, but it would fundamentally damage our market competitiveness, which is essentially like issuing a death sentence to ourselves."

On January 26 (local time), President Trump stated on his social media platform Truth Social, "The Korean National Assembly has not enacted our historic bilateral trade agreement, which is their prerogative, but as a result, tariffs on Korean automobiles, lumber, pharmaceuticals, and all other reciprocal tariffs will be raised from the current 15% to 25%."

He continued, "I made a great agreement with President Lee Jaemyung on July 30, 2025, which was favorable to both countries, and when I visited Korea on October 29, 2025, we reaffirmed these terms. So why hasn't the Korean National Assembly approved it yet?" The U.S. administration has not issued any official notification that it will implement the tariff changes threatened by President Trump. If President Trump's threat is actually carried out, it would mean a return to the pre-trade agreement tariff levels.

On the 12th, export cars were parked at Pyeongtaek Port in Pyeongtaek City, Gyeonggi Province. Photo by Yonhap News Agency

Automotive Industry Hit Hard... Hyundai and Kia's Operating Losses Exceeded 4 Trillion Won Last Year

The automotive industry is experiencing the greatest turmoil due to President Trump's sudden tariff hike notification, as the United States accounts for nearly half of Korea's total automobile exports.

According to estimates from the securities industry, Hyundai Motor and Kia's combined annual operating profit for last year was 21.5718 trillion won. Annual operating profit is projected to fall by nearly 20% year-on-year, largely due to the impact of the high 25% U.S. tariff imposed since April last year. Hyundai Motor suffered an operating profit loss of about 2.6 trillion won in the U.S. market during the second and third quarters (April to September) last year due to tariffs. Kia also recorded a loss of about 2 trillion won. Although the U.S. tariff was reduced to 15% in November last year, it is analyzed that tariff-related losses will persist in the fourth quarter due to inventory and other factors.

According to NICE Investors Service, if the tariff rate on automobile exports to the U.S. is 25%, Hyundai Motor Group's tariff costs are estimated at 8.4 trillion won. If tariffs are lowered to 15%, Hyundai Motor Group's tariff costs are expected to decrease by 3.1 trillion won to 5.3 trillion won. Thus, if tariffs rise from 15% to 25%, Hyundai Motor Group would face an additional burden of 3.1 trillion won.

An industry official explained, "If the U.S. tariff on automobiles is 25%, then except for local production, exporting finished vehicles from Korea will result in losses for every car sold. Not selling cars would reduce the losses, but it would be very difficult to regain lost market share, so losses are inevitable."

Hangoo Lee, a research fellow at the Korea Automotive Technology Institute, commented, "It appears that the Coupang incident has influenced this tariff measure under the pretext of the U.S. prioritizing its own companies. This adjustment is unlikely to end quickly, and companies are finding it difficult to respond flexibly to such a unilateral notice."

Meanwhile, the presidential office stated regarding President Trump's tariff hike notification, "We have not yet received any official notification or explanation of the details from the U.S. government," adding, "Currently, Minister of Trade, Industry and Energy Kim Jungkwan, who is staying in Canada, plans to visit the U.S. as soon as possible to discuss the matter with U.S. Secretary of Commerce Howard Lutnick."