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Auto parts makers fear slashed new deals with U.S. buyers on back of tariffs

Published: 06 Apr. 2025, 18:04

Cars are parked at Pyeongtaek-Dangjin Port in Pyeongtaek, Gyeonggi, on April 6 [NEWS1]

Korean auto parts makers are preparing for the sharp impact of new U.S. tariffs set to take effect May 3, with suppliers fearing slashed wholesale prices through contract renegotiations with U.S. buyers.

“I’m worried buyers will push for new terms,” said one industry source. “They’ll try to offset tariff costs by cutting our prices 20 to 30 percent.”

The Trump administration announced duties on 150 categories of auto parts, including engines, electric motors, lithium-ion batteries, axles, steering systems and tires — covering nearly the entire vehicle component chain.

Last year, Korea exported $7.07 billion worth of auto parts to the United States, making up 37.6 percent of all parts exports, according to the Korea International Trade Association. Key items included $647 million in engines, $1.45 billion in interior parts, and $1.12 billion in gearboxes.

Lee Hang-gu, an adviser at the Korea Automotive Technology Institute, said tariffs could cost Korean suppliers trillions of won annually.

Hyundai Mobis, Hyundai Transys and Hyundai Wia — all major exporters to U.S. carmakers — are assessing the impact. While they plan to expand production in the United States, some components are only made in Korea.

“We’ll optimize our supply chain over the next month and diversify export markets in the long term,” said a Hyundai affiliate official.

Korean tire companies are also under strain. North America accounts for 24 percent of Hankook Tire’s overseas sales, 31 percent for Kumho Tire and 24 percent for Nexen Tire.

Hankook plans to expand production at its Tennessee plant from 5.5 million to 12 million units by early next year. Nexen, which lacks a U.S. plant, faces greater uncertainty.

Kumho makes 3.3 million tires annually in Georgia but relies heavily on its Vietnam plant, which ships 13.5 million units to the United States. Washington plans to impose a 46 percent tariff on Vietnamese imports.

“We have no choice but to cut costs wherever we can,” said one tire industry official.

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

BY KIM HYO-SEONG [[email protected]]