South Korea Says U.S. Auto Tariff Cut Timing Not Yet Set

Post by : Monika

Photo: Reuters

In the beginning of August 2025, South Korea’s Industry Minister Kim Jung-kwan said that the country is still in talks with the United States to confirm exactly when a planned tariff cut on car exports will start. The U.S. had earlier agreed to reduce tariffs on South Korean cars from 25% to 15%, but the final timing has not been agreed upon yet.

This planned tariff cut was announced by President Donald Trump as part of a trade deal between the U.S. and South Korea. Although the change was expected to begin on Thursday, South Korean officials say they are still waiting for more details from Washington.

Companies like Hyundai and Kia are hoping the cut starts soon so they don’t fall behind Japanese and European carmakers who compete in the U.S. market.

Why Is This Important for Car Makers?
In 2024, South Korea exported about $35 billion worth of cars to the U.S., which is almost half of all the country’s car exports. A 25% tariff (tax on imported goods) made South Korean cars more expensive in the U.S., making it harder to compete with carmakers from other countries.

A quick cut to 15% tariffs would help reduce the cost pressure on Hyundai and Kia. That would help them keep their prices attractive and protect their market share in the U.S.

What Else Was in the Trade Deal?

• The tariff reduction is only one part of a bigger trade agreement that was shared publicly at the end of July. The agreement also includes:
• South Korea pledging to invest $350 billion in U.S. projects
• A promise to buy $100 billion worth of energy products from the U.S.
• Easier access for American cars and food products to the South Korean market
• Reducing non-tariff barriers, such as strict rules that block U.S. goods

Even though the two countries agreed on many points, there are still a few issues to work out. One example is the rules for importing American fruits and vegetables, which the U.S. thinks are too strict.

It’s Not Just About Tariffs
Earlier, the U.S. had threatened to raise auto tariffs to 25% on many imported cars, which caused a lot of concern in South Korea. The government and carmakers warned that such high tariffs could lead to serious damage to the auto industry.

• Companies feared they would face:
• Lower profits
• Trouble getting car parts
• Job losses in factories
• Even possible shut down of some exports
• Some companies even said they might move factories to other countries to avoid high U.S. tariffs.

South Korea Offers Emergency Help

• To protect its auto industry, the South Korean government has started emergency support programs. These include:
• Increasing financial aid for car companies—from 13 trillion won to 15 trillion won (around $10 billion)
• Reducing the tax on new car purchases from 5% to 3.5% until mid-2025
• Giving higher subsidies for electric vehicles, with discounts increased to 30–80%
• Helping auto companies find new export markets, especially in Africa, Latin America, and Asia
• These measures are meant to help the industry stay stable while global trade conditions change.

Agriculture and Quarantine Still in Talks
The trade deal did not include changes to South Korea’s rules about importing U.S. agricultural goods like beef or rice. However, both countries agreed to improve the inspection process for U.S. fruits and vegetables.

The U.S. believes that South Korea’s rules are too slow, and this creates problems for American farmers. Finance Minister Koo Yun-cheol said South Korea will work to make the process faster and based on science, to help reduce trade tensions.

Japan Also Wants Tariff Relief
At the same time, Japan also sent its top trade negotiator, Ryosei Akazawa, to the U.S. His goal is to ask President Trump to cut tariffs on Japanese cars too. Japan’s carmakers are also feeling pressure and want to be treated equally.

• Why It Matters for South Korea’s Economy
• South Korea’s economy depends heavily on car exports. If tariffs stay high, it could cause:
• A drop in car production (possibly by 7%)
• Lower profits for carmakers and part suppliers
• Fewer jobs in the auto industry
• Big problems for small companies that supply parts to Hyundai or Kia
• That’s why the country is pushing hard to make sure the lower 15% tariff starts soon and lasts.

What Still Needs to Be Discussed?

• Even with the deal in place, several important points still need to be finalized:
• The exact start date of the 15% car tariff
• New rules for quicker inspections of U.S. food products
• Whether South Korea will open its farm market more to U.S. goods
• What kind of financial support will be offered if things don’t go as planned
• South Korean officials said they will keep talking with the U.S. to avoid any confusion or damage.
• The U.S. has agreed to cut tariffs on South Korean cars from 25% to 15%, but no date is confirmed yet.
• Hyundai and Kia want the change as soon as possible to stay competitive.
• The cut is part of a larger trade deal that includes big investments and energy purchases.
• South Korea’s car industry is at risk if tariffs stay high.
• The government is giving financial help and tax breaks to protect jobs.
• Talks are ongoing about rules for U.S. food products entering South Korea.
• Japan also wants the same tariff cut from the U.S.
• The South Korean economy needs this issue resolved quickly to prevent serious problems in the auto industry.

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