Auto tariffs and corporate law confusion exacerbate economic uncertainty

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Auto tariffs and corporate law confusion exacerbate economic uncertainty

Published: 28 Mar. 2025, 00:00

Audio report: written by reporters, read by AI

Hyundai Motor Group Executive Chair Euisun Chung gives celebration remarks during the Hyundai Motor Group Metaplant America's opening ceremony in Bryan County, Georgia, on March 26. [HYUNDAI MOTOR]

U.S. President Donald Trump’s trade war, wielding tariffs as a weapon, is expanding. On March 26, Trump officially announced that starting April 3, the United States will impose a 25 percent tariff on foreign automobiles imported into the country. Unlike during his first term, when he merely threatened auto tariffs, he is now putting the plan into action. Additionally, on April 2, the United States is set to announce reciprocal tariffs on a country-by-country basis, factoring in non-tariff barriers.

For U.S. trade partners, this move has set off alarms. South Korea, whose top export item to the United States is automobiles, is particularly vulnerable. Last year, out of Korea’s 187 trillion won ($127 billion) in exports to the United States, automobiles accounted for 51 trillion won (27 percent). Nearly half (49.1 percent) of Korea’s automobile exports go to the United States. While Korean automakers plan to ramp up U.S. production to mitigate the tariff impact, this shift raises concerns about domestic job losses and industrial hollowing out. On March 26 (local time), Hyundai Motor Group Chairman Chung Eui-sun attended the completion ceremony of the HMGMA plant in the U.S. state of Georgia, stating, “Hyundai Motor Group did not just come to build a factory; we came to take root.” While this remark may have been aimed at local stakeholders, it inevitably raises concerns about the future of Korea’s manufacturing plants and jobs. The situation is even more dire for GM Korea, the South Korean unit of General Motors, where speculation of a possible withdrawal is growing. This is because 85 percent of its annual production is destined for export to the United States.

As uncertainty mounts due to Trump’s tariff bombshell, confusion is also spreading at home over proposed amendments to the Commercial Act that would extend directors’ fiduciary duties to shareholders. Top financial regulators have been at odds over whether the president should exercise his veto power against the bill passed by the National Assembly. Despite an inter-ministerial consensus to revise the Capital Markets Act rather than the Commercial Act, Financial Supervisory Service (FSS) Governor Lee Bok-hyun has continued to advocate for a different stance. His extreme rhetoric, such as saying he would “stake his position” in opposing a veto, makes him sound more like a rogue politician than a financial watchdog chief. Deputy Prime Minister and Finance Minister Choi Sang-mok must sternly warn the FSS governor against making unchecked remarks.

Employees make the Ioniq 5 SUV at the Hyundai Motor Group Metaplant America, which officially opened on March 26 in Bryan County, Georgia. [HYUNDAI MOTOR]

The concerns of the business community, which fears an explosion of lawsuits under the revised law, should not be dismissed lightly. It speaks volumes that Chey Tae-won, the chairman of SK Group and the Korea Chamber of Commerce and Industry, recently described the current climate as an era of "super unknown" uncertainty and questioned whether now is the right time to amend corporate law. While external uncertainties like Trump’s policies are beyond Korea’s control, the government must at least avoid exacerbating internal instability. Acting President Han Duck-soo should seriously consider exercising the presidential veto on the Commercial Act amendments, as requested by Korea’s six major economic organizations.

Translated using generative AI and edited by Korea JoongAng Daily staff.