Trump’s potential tariff hike could slash Hyundai and Kia profits by up to 19%, S&P reports

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Trump’s potential tariff hike could slash Hyundai and Kia profits by up to 19%, S&P reports

Published: 30 Nov. 2024, 15:55 Updated: 01 Dec. 2024, 13:29

JIN EUN-SOO
[email protected]

U.S. President-elect Donald Trump speaks during a meeting with the House Republican Party conference in Washington on Nov. 13. [REUTERS/YONHAP]

U.S. President-elect Donald Trump's return to the White House next year could cut earnings before interest, taxes, depreciation and amortization (Ebitda) for Hyundai Motor and Kia by up to 19 percent, according to a report released Friday by S&P Global.

Ebitda, a key measure of profitability, assesses a company’s capacity to generate cash flow.

"If a potential 20 percent tariff was applied to imports from Japan and Korea, however, another up to 9 percent of Ebitda could be at risk for Toyota and up to 19 percent for Hyundai-Kia," the credit agency stated in a report titled "Auto industry buckles up for Trump's proposed tariffs on car imports."

The credit rating company assessed, however, that a proposed 25 percent tariff plan on imports from Mexico and Canada would have a "manageable" effect on Hyundai and Kia, given that the Korean automakers produce relatively few vehicles in those regions.

It projected a decline of less than 2 percent in Ebitda for the two companies.

On the other hand, the report predicted that the tariff increase would reduce the 2025 Ebitda of General Motors, Volvo, Jaguar Land Rover and Stellantis by more than 20 percent.

BY JIN EUN-SOO [[email protected]]