U.S. President Donald Trump’s 25% tariff on imported automotive parts officially went into effect on the 3rd.
According to a proclamation announced by President Trump on March 26, the 25% tariff on imported automotive parts began to be imposed at 12:01 a.m. Eastern Daylight Time (1:01 p.m. Korean time) on this day. The 25% tariff on foreign-made automobiles has been in effect since the 3rd of last month.
However, according to a proclamation revised on the 29th of last month, tariffs on automotive parts will be partially eased for two years. This is to reduce the burden on automotive manufacturers that have production facilities in the U.S. Accordingly, from April 3 of this year to April 30 of next year, the tariff on parts corresponding to 15% of the price of vehicles assembled in the U.S. will be exempt for one year. From May 1 of next year to April 30, 2027, the tariff on parts corresponding to 10% will also be exempt.
Additionally, tariffs on automobiles and parts, as well as those imposed on Canada and Mexico, aluminum tariffs, and steel tariffs are not to overlap. A separate executive order was signed to prioritize the application of the automotive and parts tariff if a specific product falls under two or more tariffs.
As the tariffs on automotive parts have been somewhat eased from the original policy, Korean automotive parts companies appear to have gained some relief. However, it is expected that a heavy impact is unavoidable, given the high proportion of exports to the U.S. If the final consumer prices of completed vehicles rise due to tariffs, exports are likely to decrease as demand for foreign-made parts contracts.
According to the Korea International Trade Association, the proportion of Korea's automotive parts exports to the U.S. increased from 29.5% in 2020 to 36.5% last year. The proportion of Korean parts in U.S. automotive components was 6.4% as of last year. In terms of amount, it reached $13.5 billion (approximately 19 trillion won).