President Donald Trump’s threat to increase tariffs on U.S. trading partners would have a significant impact on the auto industry, particularly on South Korea and Japan. These East Asian countries produced 16.8% of vehicles sold in the U.S. in 2024, with South Korea overtaking Japan and Canada to become the second largest exporter to the U.S. after Mexico. South Korea has no tariffs on cars, while Japan has a 2.5% tariff on exports. However, the trade deal renegotiated by Trump in 2018 did not increase automotive exports to South Korea. The potential tariffs could increase costs for companies like GM and Hyundai, the largest exporters from South Korea. GM has notably increased imports from South Korea, producing popular models like the Buick Encore GX and Chevrolet Trailblazer there.
Experts warn that passing on costs from tariffs to consumers could raise prices and reduce demand for vehicles. Ford Motor CEO Jim Farley called for a comprehensive tariff policy to level the playing field in North America, targeting countries like Japan and South Korea importing large volumes of vehicles. The automotive industry, built on free trade, may struggle to adjust quickly to new tariffs, especially if they exceed 10%. Overall, potential tariffs on South Korea and Japan could disrupt the auto industry’s supply chain and impact consumer affordability. Trump’s recent signing of a memorandum outlining reciprocal tariffs did not specify which countries would be targeted, leaving uncertainty in the automotive sector.
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