For the first time in seven years, speculation about U.S. multinational automaker General Motors (GM) withdrawing from the South Korean market is reemerging, following U.S. President Donald Trump’s pledge to impose a 25% tariff on imported automobiles. With approximately 84% of GM Korea’s production currently exported to the U.S., such a tariff could eliminate the incentive to maintain manufacturing operations in South Korea.
On Feb. 18 (local time), major foreign media outlets reported that Trump, speaking at a press conference at his Mar-a-Lago estate in Florida, stated, “The tariff rate on automobiles, which will be announced on Apr. 2, will be around 25%.” He added, “I want to give companies time to come into the U.S. If they build factories here, they won’t have to pay tariffs, so we’re giving them an opportunity,” underscoring his intent to encourage automakers to relocate production to the U.S.
Hyundai Motor, backed by a strong domestic market, is expected to continue operations at its Ulsan plant even if U.S. exports are affected. Last year, the company sold 705,010 vehicles in South Korea, representing 17% of its total global sales of 4,141,791 units. Kia, similarly, recorded 541,000 domestic sales, or 17.5% of its total 3,089,457 units sold worldwide. If exporting to the U.S. becomes more difficult, both Hyundai and Kia could shift shipments to other markets.
GM Korea, however, faces a different situation. The company sold 499,559 vehicles last year, with only 5%—24,824 units—sold domestically. Of the remaining 474,735 vehicles, 420,000 were exported to the U.S., making up 84% of its total production. As a key production base for GM’s U.S.-market vehicles, a 25% tariff could render its South Korean manufacturing operations unsustainable.
To remain viable, GM Korea would need to expand its domestic production lineup and increase local sales, but that prospect remains uncertain. Under GM’s global strategy, its South Korean plants are currently designated for small SUV production only.
At present, GM Korea’s Bupyeong plant manufactures three models: the Trailblazer, a small SUV for the domestic market, and the export-focused Trax Crossover and Buick Envista. The GM Korea labor union has repeatedly pushed for electric vehicle production at the plant, but GM headquarters has rejected the request.
GM previously considered leaving South Korea in 2018 during a global restructuring tied to its electrification strategy, which included a review of its South Korean operations. The South Korean government intervened, injecting 810 billion won ($610 million) in public funds, allowing GM to close only its Gunsan plant while maintaining its other facilities.
Since then, GM has split its South Korean operations into two entities: the Bupyeong plant’s manufacturing division and GM Technical Center Korea (GMTCK), which focuses on research and development. If the proposed tariffs take effect, GM may shut down its production facilities while keeping GMTCK operational.
At the end of last year, GM Korea conducted a voluntary retirement program, initially targeting senior vice presidents and directors before extending it to lower-tier managers and team leaders. Industry insiders widely speculated that GM was preparing for large-scale restructuring in anticipation of a potential second Trump administration and a subsequent exit from South Korea.
If GM withdraws, its South Korean suppliers are expected to face substantial losses. According to an association of GM Korea’s suppliers, GM Korea had 276 first-tier suppliers as of last year. Factoring in second- and third-tier suppliers, the total number is estimated at around 3,000 companies.
