A 15% US tariff has effectively ended the duty-free benefit Korean automakers received under the Korea-US free trade agreement, creating a potential hit of 10 trillion won for the industry. Automakers facing weaker earnings and cash flow may pressure parts suppliers to cut delivery prices, shifting the burden down the supply chain.
Expanding production in the United States is being discussed as a response, but industry concerns remain that it could weaken Korea’s domestic industrial base and employment.