Hyundai back in limbo as Trump threatens to restore 25% tariffs for ‘not living up to deal’
Published: 27 Jan. 2026, 18:57
Updated: 27 Jan. 2026, 20:52
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- SARAH CHEA
- [email protected]
Audio report: written by reporters, read by AI
![Hyundai Motor Group Executive Chair Euisun Chung speaks at the White House as U.S. President Donald Trump watches on on March 24. [SCREEN CAPTURE]](https://koreajoongangdaily.joins.com/data/photo/2026/01/27/56515330-1738-4d32-9c4d-f91145587eb6.jpg)
Hyundai Motor Group Executive Chair Euisun Chung speaks at the White House as U.S. President Donald Trump watches on on March 24. [SCREEN CAPTURE]
The move, announced Tuesday morning on Trump’s social media account, came at a perilous time as Hyundai is already grappling with slowing EV sales and intensifying pressure from the Canadian government to build a factory.
The U.S. president said he will increase Korea’s “autos, lumber, pharma and all other reciprocal tariffs, from 15 percent to 25 percent,” claiming that the National Assembly is “not living up to its deal with the United States.”
The reference appears to point to Korea’s delayed parliamentary approval of a bill required to fulfill $350 billion investment pledges made to Washington, which was first introduced on Nov. 26 last year but has yet to pass.
If the 25 percent tariff is reinstated, it will cost Hyundai and Kia nearly 5 trillion won more annually.
Meritz Securities predicted that every 10 percentage point increase in tariffs would raise operating expenses by roughly 3.1 trillion won for Hyundai Motor and 2.2 trillion won for Kia, while reducing operating profit by 23 percent for Hyundai and 21 percent for Kia.
![Cars are waiting to be exported at a port in Pyeongtaek, Gyeonggi, on Jan. 27. [NEWS1]](https://koreajoongangdaily.joins.com/data/photo/2026/01/27/53e1d82a-a08b-4605-8555-cf2e70e4e600.jpg)
Cars are waiting to be exported at a port in Pyeongtaek, Gyeonggi, on Jan. 27. [NEWS1]
“In previous periods of high tariffs, automakers were able to absorb some of the shock using inventory,” said Lee Hang-gu, a researcher at the Korea Automotive Technology Institute. “This time, inventories have already been depleted, making it more likely that the impact will be felt directly.”
“The scale of the tariff increase —10 percentage points — is roughly equivalent to the operating margins of automakers, meaning it could translate directly into a deterioration in profitability.”
Following the imposition of a 25 percent tariff in April last year, Hyundai and Kia recorded combined losses of 4.64 trillion won over the second and third quarters alone.
Including fourth quarter results yet to be announced, full-year operating profit for 2025 is projected at 21.5 trillion won, down 20.1 percent from a year earlier.
The tariff hike would also deal a blow to GM Korea, which exports about 90 percent of its production to the United States, risking pushing the automaker to close down its Korean plants.
Still, some analysts view Trump’s remarks as a pressure tactic aimed at accelerating legislative action in Seoul rather than a definitive policy shift, which could ultimately be changed again once the required approvals are secured.
“If Korea fulfills its investment commitments to the United States through legislative approval or other means, tariffs are likely to revert to the agreed 15 percent,” said Song Sun-jae, an analyst at Hana Securities, adding that the firm has not revised earnings estimates to reflect higher tariff costs.
That sentiment appeared to be reflected in the stock market, as Hyundai shares recovered most of their losses shown in the early morning to close down just 0.81 percent at 488,500 won.
Kia shares ended the session down 1.1 percent at 153,500 won.
BY SARAH CHEA [[email protected]]
with the Korea JoongAng Daily
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