As the South Korea–U.S. trade talks concluded, the U.S. automobile tariff rate is set to be lowered to 15% from 25%. Park Gwang-rae, an analyst at Shinhan Investment & Securities, said on the 30th that with the tariff cut, the combined tariff burden on Hyundai Motor and Kia could fall from the 8 trillion–9 trillion won range to the 5 trillion won range.
Park estimated that a 10-percentage-point cut in the tariff rate would reduce the annual tariff burden by 2.2 trillion won for Hyundai Motor and 1.6 trillion won for Kia. Park said, "With the tariff cut, we were able to raise our 2026 annual operating profit estimates for Hyundai Motor and Kia by 18.2% and 16.3%, respectively."
Hyundai Motor and Kia do not have to pay the tariff directly, but given price competitiveness and other factors, they had to bear a certain portion of the burden. In particular, they can now compete in the U.S. market on equal terms with the European Union (EU) and Japan, which previously benefited from tariff cuts.
Park said, "In a high tariff environment of 25%, Hyundai Motor and Kia were likely to pursue aggressive incentive policies to make up for weakened price competitiveness, but as the tariff burden eases, they now have room to reduce such bleeding."
However, Park noted that some of the expectations may have already been priced into the shares. He said, "The current price-earnings ratio (PER, market capitalization ÷ net profit) for (Hyundai Motor and Kia) is similar to the level in the first half of 2024, when shares rose on expectations for the government's value-up policy and the India subsidiary's initial public offering (IPO)," adding, "I expect a breather after a sharp rally." He went on, "Considering foreign inflows and expectations for separate taxation of dividends, short-term overshooting beyond fundamentals is also possible."