U.S. President Donald Trump announced he would suspend reciprocal tariffs on all trading partners for 90 days and indicated he would exempt certain corporations from tariffs. If the exemption applies only to American corporations, it would be a setback for Korean corporations, but if it is expanded to companies that increase employment and investment in the U.S., then Korean corporations could benefit.
According to the Wall Street Journal (WSJ) on the 11th, President Trump revealed the policy to suspend reciprocal tariffs in the White House on the 9th (local time), stating, "I will also consider whether to exempt tariffs applied to corporations."
When asked if he had any thoughts on exempting tariffs for corporations that would suffer due to tariff imposition, he said, "There will certainly be corporations that are severely affected, and due to the nature of businesses, there may be some that suffer even greater impacts. We will look into that part (tariff exemption)."
Automotive News, a U.S. automotive media outlet, reported that expectations are growing in the automotive industry that the tariffs on finished cars and parts will be reduced or eliminated due to President Trump's suspension of reciprocal tariffs.
Unlike reciprocal tariffs applied by country, automobiles are included in item-specific tariffs and are excluded from this suspension measure. The U.S. has imposed a 25% tariff on imported automobiles since the 3rd and will impose a 25% tariff on automotive parts starting from the 3rd of next month.
Tariffs on automobiles have also impacted American automotive corporations. In particular, General Motors (GM) and Stellantis produce a significant quantity of vehicles sold in the U.S. overseas, including in Canada and Mexico. Ford has over 80% of its production in the U.S., but it is also in a critical situation as it imports key components.
According to Automotive News, Jim Farley, Chief Executive Officer (CEO) of Ford, has been lobbying the White House to avoid tariffs on automotive parts. He has argued that tariffs on automotive parts will cause serious disruptions to American corporations' supply chains.
Finished car manufacturers are on high alert over whether the tariff exemption measure will apply only to American corporations. If only GM, Stellantis, and Ford benefit from it, then companies like Hyundai Motor, Kia, Toyota, and Honda will be placed at a disadvantage in price competition.
Conversely, if the tariff exemption includes global finished car corporations that have made large investments and employment in the U.S., then Hyundai Motor and Kia are expected to benefit. Chung Eui-sun, the Chairman of Hyundai Motor Group, met with President Trump last month and promised an investment of $21 billion (approximately 31 trillion won) in the U.S.
In the case of Hyundai Motor, it produces the mid-size sports utility vehicle (SUV) Tucson, the mid-size SUV Santa Fe, and the pickup truck Santa Cruz at its Alabama plant in the U.S. Kia manufactures the mid-size SUV Sportage, mid-size SUV Sorento, large SUV Telluride, and electric vehicles EV6 and EV9 at its Georgia plant. Meanwhile, the only hybrid model manufactured in the U.S. is the Santa Fe Hybrid.
An official from the finished car industry said, "If tariff exemption benefits are given only to American corporations, it would eliminate the justification for demanding American investments and employment from foreign corporations, and it could be perceived as blatant discrimination," adding that "individual tariff imposition measures could provoke more controversy than reciprocal tariffs."