Tension is rising within Hyundai Motor Group as U.S. President Donald Trump has warned of a 25% tariff on steel coming into the United States. If the tariff is implemented, it will become difficult for Hyundai Steel to export to the U.S., and Hyundai Motor and Kia, which produce cars locally, may also face challenges in sourcing steel.
On the 10th (local time), major foreign media outlets including Reuters reported that President Trump told reporters aboard a private plane en route to New Orleans for the National Football League (NFL) championship game known as the Super Bowl, "A 25% tariff will be imposed on all steel coming into the United States."
During the Trump administration's first term, the U.S. imposed a 25% tariff on steel and a 10% tariff on aluminum. However, it granted duty-free quotas for certain countries, allowing exemption from tariffs up to a certain amount. South Korea has exported steel to the U.S. without tariffs for up to 2.63 million tons (t) annually.
President Trump, while mentioning tariffs on steel and aluminum, remained tight-lipped about specific implementation measures. If the duty-free quotas are adjusted or, in the worst-case scenario, abolished, exports of steel products to the U.S. will inevitably suffer serious setbacks. Exports of steel to the U.S., which reached 3.4 million tons annually before the Trump administration took office, plummeted to 2.5 million tons after the export restrictions were enacted in 2018.
Among the affiliates of Hyundai Motor Group, Hyundai Steel is the business directly impacted by the imposition of tariffs. Hyundai Steel does not have a plant in the United States and exports all of its production domestically. It supplies automotive steel plates to Hyundai, Kia, General Motors (GM), Ford, and about 20 other automakers. Last year, sales of steel plates to overseas companies, excluding Hyundai and Kia, exceeded 1 million tons. Hyundai Steel plans to increase its proportion of sales to non-affiliated companies from the current 20% to over 30%, but achieving this goal will realistically become more difficult with the imposition of tariffs.
Hyundai and Kia, which receive all the steel plates used in vehicles produced in the U.S. from Hyundai Steel, are likely to face disruptions in production. Last year, Hyundai produced 361,632 vehicles and Kia produced 354,100 vehicles in the U.S. This year, a new eco-friendly vehicle plant known as "Metaplant America" that has just been constructed in Georgia is expected to increase local production volumes further.
Hyundai Steel has been considering plans to build a steel mill in the U.S. since President Trump won the election in November last year. However, it requires over 10 trillion won in funding to build the steel plant, and even if it starts construction immediately, it is expected to be completed no earlier than around 2030, making it difficult to avoid the damages incurred from steel tariffs during the Trump administration.
An automotive industry representative noted, "If the imposition of tariffs becomes a reality, most global steelmakers exporting to the U.S., including Hyundai Steel, are likely to lose their market share to U.S. companies such as US Steel, and Hyundai and Kia will struggle in domestic competition due to increased expenses."