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Auto exports to U.S. fall 15.2% with new tariffs set to cloud outlook further

Published: 16 Sep. 2025, 17:39 Updated: 16 Sep. 2025, 18:27

Cars ready for export are parked at a port in Pyeongtaek, Gyeonggi, on Sept. 16. [YONHAP]

Korea’s automobile exports, domestic sales and production volume all increased for the second consecutive month, but the outlook remains uncertain as exports to the United States — Korea’s largest vehicle market — have declined for six straight months, and a new 10 percentage point tariff gap with Japan takes effect on Tuesday.

Korea’s automobile exports totaled $5.5 billion last month, up 8.6 percent from a year earlier — the highest figure ever recorded for the month of August — according to the Ministry of Trade, Industry and Energy’s August 2025 automotive industry trends report released on Tuesday.

Notably, exports to the European Union rose 54 percent to $790 million, while exports to other European countries climbed 73.2 percent to $550 million.

Domestic auto sales in August reached 138,809 units, an 8.3 percent increase compared to the same month last year and seven straight months of growth. Sales of environmentally friendly vehicles rose 36.1 percent to 70,393 units, accounting for 50.7 percent of total domestic sales of automobiles.

Production was also up, rising 7.1 percent on year to 321,008 units. This marked the second consecutive month of simultaneous increases in exports, domestic sales and production, following July.

Despite the strong overall performance, exports to the United States fell 15.2 percent on year to $2.097 billion, continuing a six-month downward trend. The monthly U.S. export on-year growth rate has been negative since March: minus 10.8 percent in March, minus 19.6 percent in April, minus 27.1 percent in May, minus 16 percent in June, minus 4.6 percent in July and minus 15.2 percent in August.

Cars ready for export are parked at a port in Pyeongtaek, Gyeonggi, on Sept. 16. [YONHAP]

Adding to the pressure, a new tariff gap went into effect on Tuesday, effectively reducing the tariff rate for Japanese cars in the United States by 10 percentage points compared to Korean vehicles. This development has heightened concerns that Korea’s exports to the United States could decline further.

If the tariff gap continues for an extended period, the Korean automobile industry could face mounting losses.

Some experts warn that the current 25 percent tariff on Korean cars and auto parts exported to the United States may not be lifted within the year.

"It took 56 days from the July 22 agreement to the implementation of the tariff reduction on Japanese cars bound for the United States from 27.5 percent to 15 percent," said Lee Hyun-wook, an analyst at IBK Investment & Securities. "Even after reaching an agreement to reduce the 27.5 percent tariff on British cars to 10 percent, it took 53 days for it to take effect."

Cars ready for export are parked at a port in Pyeongtaek, Gyeonggi, on Sept. 16. [YONHAP]

"Even if a deal [between Korea and the United States] is finalized by the end of September, it is unlikely that the tariff reduction will take effect before the year's end,” Lee said. “If the current tariff level remains in place, Hyundai Motor could face monthly costs of about 400 billion won [$290 million], while Kia may incur 300 billion. The longer the delay in tariff reductions, the greater the financial burden."

Korea is pushing for a tariff agreement similar to that of Japan's with the United States. However, Washington is pressuring Seoul to accept terms similar to Tokyo's that would give the United States control of a $350 billion investment package, stalling the negotiations.

Trade Minister Yeo Han-koo, Korea’s chief trade negotiator, arrived in Washington on Tuesday and said, "We are working to ensure the [15 percent] rate is applied as soon as possible," adding, "This is a negotiation process — we won’t be swayed by each turn of events."

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.
BY KIM WON [[email protected]]