Quick Take
South Korea and the US have agreed to slash tariffs on Korean vehicle exports from 25% to 15%, giving Hyundai Motor a much-needed breather after months of painful losses.
The Breakdown
The new trade agreement, announced Thursday, cuts the punitive tariff that had been hammering Korean automakers since April. Hyundai Motor CEO Jose Munoz called it a game-changer, saying the deal "removes uncertainties" and creates "predictable frameworks" for operations.
The numbers tell the story: that brutal 25% tariff cost Hyundai an estimated 828.2 billion won ($591.7 million) in Q2 alone, contributing to a 15.8% drop in operating profit to 3.6 trillion won. Ouch. More than half of Hyundai's US sales still depend on Korean imports, despite producing over 200,000 vehicles stateside in H1 2025.
Investor Lens
This is solid news for Hyundai Motor Group shares, removing a major operational headwind that was bleeding cash. The tariff relief supports the company's massive $21 billion US investment strategy and pledge to create 100,000+ American jobs.
However, it's not all champagne and confetti. The deal also ends Hyundai's previous zero-tariff advantage under the Korea-US Free Trade Agreement. Japanese and European rivals, who previously faced just 2.5% tariffs, are now on equal footing at 15% under their own trade deals.
Context Check
This agreement reflects the broader trend of "managed trade" replacing free trade in the post-COVID era. As US-China tensions simmer and supply chain resilience becomes paramount, we're seeing more targeted tariff deals that balance protectionism with pragmatism.
For Korea, this represents successful damage control after months of diplomatic pressure. For the auto sector globally, it signals that trade wars aren't zero-sum – negotiated settlements can create breathing room for companies caught in geopolitical crossfire.
The real test? Whether Hyundai can leverage this tariff relief to accelerate its US manufacturing ramp-up and reduce import dependence entirely.
Source: Korea JoongAng Daily, August 1, 2025