Hyundai, Samsung brace for hefty U.S. tariffs after Trump reveals implementation details

South Korean automotive and chip companies are devising strategies to deal with looming hefty tariffs on their U.S. exports, industry observers said Wednesday, after U.S. President Donald Trump announced his intention to impose auto duties of around 25 percent and similar levels on chips.

Trump revealed his intention Tuesday (U.S. time) to impose such duties on auto imports as early as April 2 and introduce similar or higher sectoral tariffs on semiconductors and pharmaceuticals, without providing specific dates for those sectors.

According to industry observers, Hyundai Motor Group has been preparing for such tariffs since Trump’s reelection by accelerating efforts to increase its production capacity in the U.S.

The South Korean automotive giant aims to boost the production capacity of its Hyundai Motor Group Metaplant America (HMGMA) in Georgia from 300,000 to 500,000 units per year.

Additionally, it plans to leverage output from its separate Alabama and Georgia plants, currently at 356,100 units and 340,000 units per year, respectively, to elevate the group’s total U.S. production capacity.

The move is designed to mitigate tariff-related costs by increasing the proportion of vehicles sold directly from U.S. plants. However, as expanding local production would lead to additional expenses, the industry is carefully deliberating specific expansion strategies.

Of some 1.7 million vehicles Hyundai Motor Co. and Kia Corp. sold in the U.S. last year, approximately 60 percent were manufactured in South Korea.

Kim Seung-jun, chief financial officer at Kia, said during an earnings conference call last month that with potential tariffs creating short-term financial burdens, the company is exploring price adjustments and shifts in the location of production as long-term solutions.

GM Korea Co., the South Korean unit of General Motors (GM) Co. of the U.S., ships approximately 84 percent of its production to the American market.

The company is thus also closely monitoring tariff-related policy changes. Industry observers suggest that the GM headquarters could reallocate GM Korea’s production volume to its U.S. factories.

South Korean auto parts suppliers are also evaluating the feasibility of expanding their U.S. production.

Axel Maschka, executive vice president of auto parts maker Hyundai Mobis Co., indicated during CES 2025 in Las Vegas last month that increasing production bases in North America is under consideration, given the likelihood of U.S. tariff requirements.

Some industry insiders, however, question whether significant facility investments in the U.S. are the best way to avoid added American duties.

“Relocating production facilities requires substantial costs and a long-term process,” an industry official said, asking to remain unnamed. “Unless a company has sufficient financial resources or a high market share in the U.S., relocation may not be necessary.”

Chipmakers, such as Samsung Electronics Co. and SK hynix Inc., are also bracing for fallout from Trump’s tariff warning on semiconductors.

Semiconductors ranked as South Korea’s third-largest exported good to the U.S. last year, with shipments totaling US$10.6 billion, according to the Korea International Trade Association.

“With South Korean semiconductors accounting for about 7 percent of total U.S. chip imports, a minimum 25 percent tariff would inevitably impact the industry,” an industry source said, asking not to be identified.

However, experts suggest the actual impact on South Korean semiconductor firms may be limited amid strong demand and a lack of viable alternatives to Korean products.

“Legacy memory chips are dominated by South Korea and China, and tariffs would only increase the burden on U.S. buyers,” said Lee Jong-hwan, a professor of semiconductor engineering at Sangmyung University.