The Trump administration and South Korea have finally reached a trade agreement that is poised to save Hyundai and Kia billions in losses.
The details: The bilateral trade deal, which has been in the works for weeks as part of a broader economic agreement, is anchored in a few key concessions, reports Reuters.
The general tariff rate on imports from South Korea, including autos, will drop from 25% to 15% retroactive to November 1, bringing it in line with Japan and Taiwan.
In return, South Korea will invest $350 billion into strategic industries in the U.S., including shipbuilding.
What they’re saying: "Korea’s commitment to American investment strengthens our economic partnership and domestic jobs and industry," said U.S. Commerce Secretary Howard Lutnick, per Reuters, adding that he was "grateful for the deep trust between our two nations."
Why it matters: Lower tariffs on South Korean imports could translate into more competitively priced Hyundai and Kia models, more inventory flexibility, and greater incentives—factors that can drive showroom traffic and sharpen pricing against rival brands.
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Between the lines: Hyundai Motor—which is headquartered in South Korea—stands to benefit the most of any automaker, given how the tariffs imposed on the country have eaten away at the company’s profits.
The operating profits of Hyundai and Kia plummeted 29% and 49% in the third quarter, respectively, due largely to the tariffs.
Analysts estimate that the 15% tariff reduction could help Hyundai and Kia cut annual operating losses by 3 trillion to 4 trillion won ($2.1 billion to $2.8 billion).
The new trade deal—coupled with several major investments Hyundai Motor has already made in its U.S. production pipeline—is expected to boost North American sales for both Hyundai and Kia.
What they’re saying: “We will focus on strengthening quality, brand competitiveness, and technological innovation to reinforce internal stability alongside the tariff easing,” said an official from Hyundai Motor, according to a Pulse report.
Bottom line: If the tariff cuts flow through to vehicle pricing and incentives, Hyundai and Kia dealers could see improved margins and stronger demand—especially in price-sensitive segments—while competitors may feel pressure to respond with their own discounts and offers.
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