Trump's tax cuts could axe $1.9 billion in Korean EV sales, report says

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Trump's tax cuts could axe $1.9 billion in Korean EV sales, report says

Published: 21 Jul. 2025, 18:36 Updated: 22 Jul. 2025, 19:59

Audio report: written by reporters, read by AI

U.S. President Donald Trump gestures after signing the sweeping spending and tax legislation, known as the ″One Big Beautiful Bill Act,″ at the White House in Washington, D.C., U.S., July 4, 2025. [REUTERS/YONHAP]

The implementation of the “One Big Beautiful Bill Act”, a large-scale tax cut package in the United States that took effect on July 4, could reduce the U.S. sales of Korean-made electric vehicles by up to $1.9 billion, according to data from the Federation of Korean Industries (FKI).

According to a report released Sunday by the federation, titled “The Impact and Implications of the U.S. Trump Administration’s Large-Scale Tax Cut on the Automotive and Battery Industries” (translated), the bill effectively repeals policies favorable to electric vehicles (EVs) under the Biden administration’s Inflation Reduction Act (IRA), along with other green executive orders. Notably, the EV tax credits that spurred Korean automotive and battery firms to expand investment in the U.S. will end in September.

The FKI estimates that the bill could lead to an annual decline of up to 45,828 units in Korean EV sales in the United States, translating to approximately $1.95 billion in lost revenue. Last year, Hyundai Motor Group sold 123,861 EVs in the United States, meaning it could lose around 37 percent of its sales.

Hyundai Motor Group has been investing about $8 billion in building a dedicated EV plant in Georgia to expand its presence in the North American EV market. Expectations had been high after five of its EV models — the Ioniq 5, Ioniq 9, EV6, EV9 and GV70 — became eligible for tax credits this January, but the enactment of the bill has raised concerns over investment recovery. Korea’s three major battery makers — LG Energy Solution, Samsung SDI and SK On — which have pursued more than 72 percent of their U.S. operations through joint ventures with automakers, also face risks of reduced capacity utilization and deteriorating profitability.

The FKI urged swift passage in the National Assembly of a proposed revision to the Korea Development Bank Act, which would establish a 50 trillion won ($36 billion) Advanced Strategic Industry Fund, as well as a bill for state guarantees on fund bonds. It also called for the introduction of direct tax refunds for research and development as well as facility investments in national strategic technologies because the current corporate tax deduction framework offers no benefits for companies incurring operating losses.

U.S. President Donald Trump presents the sweeping spending and tax legislation, known as the ″One Big Beautiful Bill Act,″ after he signed it, at the White House in Washington, D.C., U.S., July 4, 2025. [REUTERS/YONHAP]

The report also recommended offering tax incentives for domestic production of strategic technologies like batteries at levels competitive with other nations, and extending the duration of the supply chain stabilization fund, currently set to end in 2029, to help Korean companies respond to global supply chain crises.

“To ensure that the EV and battery sectors become future growth engines, comprehensive support combining funds and tax benefits must be expedited," said Lee Sang-ho, head of FKI’s Economic and Industrial Division.

On the same day, the Korea Enterprises Federation (KEF) also called for tax system improvements to stimulate economic vitality, including the introduction of direct tax refunds. In a proposal submitted to the Ministry of Economy and Finance, the KEF urged the extension of the temporary investment tax credit set to expire this year and its expansion to cover large companies. It also called for designating the culture and content industries as national strategic technologies and for reviewing an extension and expansion of tax credits for video content production.

The KEF further argued for reforming inheritance and gift taxes to enhance corporate sustainability and capital market vitality, proposing a shift to an inheritance acquisition tax system that aligns with global standards by taxing inheritances based on the actual assets received. Additionally, it recommended introducing corporate tax deductions for companies that expand shareholder returns, and providing incentives for individual investors through separate taxation on dividend income and benefits for long-term investments.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY NA SANG-HYEON [[email protected]]