Hyundai Bolsters US Strategy as South Korea Secures Revised Trade Deal with Washington

Hyundai Motor Group’s (HMG) strategic push in the United States has received a significant boost following the announcement of a newly agreed trade deal between South Korea and the US. The agreement, confirmed by South Korean officials, includes a vital reduction of US import tariffs on South Korean vehicles.

The deal, revealed by South Korea's chief policy advisor Kim Yong-beom, will see tariffs on US imports of Korean cars and auto parts lowered to 15%, a substantial decrease from the current 25%. This move levels the playing field with Japanese competitors, who also face a 15% duty under their own agreement with Washington.

This development follows a visit to the US by HMG's executive chairman, Chung Euisun, to support the South Korean government's efforts to renegotiate market access. A previous mission in August had failed to alter the Trump administration's trade policy, which had placed South Korean automakers at a significant disadvantage.

HMG's Hyundai Motor and Kia Corporation, alongside GM Korea, are estimated to have exported a combined 1.6 million vehicles to the US last year, worth approximately $38 billion. Despite toughening trade conditions, HMG's sales in the US grew by over 10% in the first nine months of 2025, even as imports from South Korea dropped by nearly 7% due to increased local sourcing.

The new 300,000-unit-per-year Hyundai assembly plant in Savannah, Georgia, which became operational last year, is central to this localisation strategy.

Investment Clarity and Market Stability

The newly struck trade deal also provides clarity on the structure of South Korea's pledged $350 billion investment in US manufacturing, a key sticking point in earlier negotiations.

The agreement splits the fund into two portions. A $200 billion cash commitment will be paid in phased instalments, capped at $20 billion per year to ensure stability in South Korea's foreign exchange market. The remaining $150 billion is allocated for shipbuilding cooperation, involving guarantees and investments by South Korean companies, which reduces the direct burden on the national treasury.

South Korean officials stated that funds for the investment would be sourced from operating income from the country's foreign assets, such as interest and dividends, with likely fundraising in offshore markets rather than through government bonds domestically. An investment committee, to be headed by US Commerce Secretary Howard Lutnick, will assess potential projects, with profits split 50/50 before initial investments are recouped.

Strategic Pivot for Hyundai

The trade news comes as HMG navigates operational challenges in the US. The company recently announced an increase in its planned US investments from $21 billion to $26 billion. This includes expanding the Savannah plant to 500,000 vehicles per year by 2028 and strengthening the US operations of Hyundai Steel.

However, the company has faced headwinds. A raid by US immigration authorities on its Georgia electric vehicle (EV) battery joint venture with LG Energy Solution is expected to delay the project. Furthermore, slower-than-expected growth in US battery electric vehicle demand and the scrapping of federal EV tax incentives have forced a strategic shift.

In response, HMG is now focusing on producing more hybrid vehicles at its Georgia plant, which has been redesigned to build both hybrids and battery electric models. In reaction to the now-resolved tariff threat and the withdrawal of incentives, Hyundai and Kia had begun raising US prices, but the new trade terms are likely to alleviate some of that pressure.

With the revised trade agreement, HMG is better positioned to execute its long-term strategy of expanding local production to maintain competitiveness and growth momentum in the critical US market.