A Polestar 3 unveils during the 2026 Polestar Media Day at Grand Hyatt Seoul in Yongsan District, central Seoul, on Feb. 11.NEWS1
Korean automakers and steelmakers are moving to capitalize on escalating Washington-Beijing tensions, as Washington's crackdown on vehicles and metals made in China or owned by a Chinese brand opens new opportunities for domestic firms to expand their footholds in the U.S. market.
According to the auto industry on July 9, Renault Korea's Busan plant will cut production of the Polestar 4 coupe, a model made on commission for China's Geely for export to North America, and begin producing the Polestar 4 SUV for global export instead.
The shift became unavoidable after the U.S. government recently moved to ban sales of Polestar, a Geely-owned brand, starting in 2027, stripping the Busan plant of its role as Polestar's North American export base. As the plant transitions into a global production hub, Renault Korea's contract manufacturing volume is expected to increase further.
Under its "connected vehicle rule," the U.S. Commerce Department can restrict the sale of vehicles owned or controlled by China or Russia in the U.S. market. Polestar, formerly a Volvo subsidiary, had marketed itself on its "Swedish heritage" while manufacturing vehicles in the United States and Korea, but was ultimately caught by the fact that Geely, a Chinese automaker, is its largest shareholder.
Regulatory barriers are set to grow steeper. The Motor Vehicle Modernization Act of 2026, currently under discussion in the U.S. Congress, would ban sales in the country of any vehicle with even a small direct or indirect ownership stake held by an adversarial government. Under that standard, Mercedes-Benz could also face a sales ban, given that BAIC, a Chinese state-owned automaker, holds roughly a 10 percent stake in the German company.
Another bill called the Connected Vehicle Security Act has been jointly introduced in both chambers of Congress, which would regulate the sale of brands in which an adversarial government holds a stake of 15 percent or more. That measure could target not only Mercedes but also marks with Chinese investment, such as Volvo and the British automaker Lotus.
Kia America celebrates the production of its Sportage Turbo-Hybrid car built at the Hyundai Motor Group Metaplant America in Ellabell, Georgia, on June 2.NEWS1
Korea's auto industry sees an opportunity to expand its share of the U.S. market. For Hyundai Motor, whose domestic sales have slowed, the U.S. market has taken on even greater importance after the automaker posted record first-half sales there this year.
"With Chinese automakers mounting such an aggressive push, performance in the U.S. market has become even more critical for Korean brands, since it's nearly the only major market where we don't have to compete directly with Chinese companies," an industry source said.
Korea's steel and nonferrous metal industries, which have struggled to compete with China, are also rushing to expand into the United States as U.S.-China tensions create an opening. While Japan's Nippon Steel acquired U.S. Steel to enter the U.S. supply chain, Korean companies are instead building their own plants domestically in the country to create what they are hoping will amount to a Korean-built localized supply chain.
Hyundai Steel, for instance, is slated to hold a groundbreaking ceremony on Sept. 4 for a new steel mill in Louisiana. The electric-arc furnace plant will have an annual capacity of 2.7 million tons, with commercial production targeted for 2029. Posco has also participated as an equity investor in the project. Steel produced at the new mill will also be supplied to Hyundai Motor Group's U.S. plants, part of a strategy to secure a domestic supply of automotive steel sheet in order to reduce tariff exposure and strengthen the group's production competitiveness.
Korea Zinc is also pursuing an integrated smelter in Clarksville, Tennessee, investing roughly $7.4 billion, or about 11 trillion won, in a facility spanning 650,000 square meters (7 million square feet). Construction is set to begin next year, with commercial production targeted for 2029. The facility will produce 13 types of nonferrous metals, including 11 critical minerals designated by the U.S. government.
Steel parts are stacked at a port in Pyeongtaek, Gyeonggi, on April 3.NEWS1
This wave of investment by the Korean industry aligns with the Donald Trump administration's push to reshore core strategic resources such as steel, nonferrous metals and critical minerals. For Korean companies, the shift also offers the advantage of improving access to the American market while reducing policy risk.
Still, experts caution against overconfidence, warning that Trump's positions can shift unpredictably.
"It's a stretch to say that U.S. pressure on China is unconditionally beneficial for Korean companies," said Kim Tae-hwang, a professor of international trade at Myongji University. "If the United States also cracks down on indirect or roundabout exports from China, that could become a burden for Korean companies that rely on Chinese raw materials or intermediate goods."
"This is a moment when expanding our industry's productivity and pursuing technological innovation are absolutely essential."
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
