U.S. President Donald Trump on Mar. 26 signed an executive order imposing a 25% tariff on all foreign-made vehicles—a move widely expected to deal a blow to Hyundai Motor Company and its affiliates. In response, Hyundai is stepping up investment in its U.S. manufacturing operations, while subsidiaries are working to reduce dependence on Hyundai and Kia as they pursue stronger standalone competitiveness.
According to industry sources on Mar. 28, the order standardizes tariffs across all passenger cars, small trucks, and pickup trucks at 25%, up from the previous 2.5% and 25% rates, respectively. The measure also covers key auto components such as engines and transmissions. The tariff on completed vehicles will take effect on Apr. 2, while the levy on parts will begin on May 3. Vehicles manufactured in the U.S. will be exempt.
Hyundai Motor plans to invest approximately 3 trillion won ($21 billion) to raise its annual production capacity in the U.S. from 1 million to 1.2 million units. Hyundai Glovis, which oversees shipping for Hyundai and Kia, projects limited disruption from the tariff shift, even with an expected rise in local production. The company pointed to an increasing share of revenue from non-affiliated clients and noted that while Hyundai and Kia’s overseas production has grown to 3.3 million units over the past two decades, domestic output has remained stable.
Hyundai Glovis also expects that expanded U.S. production will boost vehicle logistics within the country. Shipments of semi-knocked-down (SKD) parts from South Korea are also likely to increase. “Between 2020 and 2024, Hyundai and Kia’s overseas production rose by 18%, while Hyundai Glovis’ SKD-related revenue jumped 75% and overseas logistics revenue surged 93%,” said Song Sun-jae, an analyst at Hana Securities.
In recent years, Hyundai Glovis has worked to broaden its client base beyond Hyundai Motor Group. Group Chairman Chung Eui-sun has urged affiliates to strengthen their independent capabilities. Glovis now provides logistics services to a number of global automakers, including Germany’s Volkswagen and China’s BYD. “The industry has faced a shortage of car carriers in recent years. We’ve been able to allocate shipping capacity to non-affiliated clients and continue expanding across global markets,” a company official said.
Hyundai Mobis, the group’s auto parts arm, is also expected to feel the pinch from the new tariffs but is aiming to expand its order book in North America. The company currently supplies headlamps, tail lamps, and display modules for key Stellantis models, and provides General Motors with central control units for audio and HVAC systems, as well as electric parking brakes. Since the second half of 2022, it has been producing chassis modules for Mercedes-Benz in Alabama.
“We are monitoring future guidelines and standards from the U.S. administration to identify ways to minimize the impact,” a Hyundai Mobis official said.
As part of a broader effort to reduce reliance on Hyundai Motor Group, Hyundai Mobis last year surpassed 3 trillion won ($2 billion) in operating profit for the first time. In 2023, it secured a record $9.22 billion in orders from global automakers.
