Trump’s ‘America First’ Policy: A 60% Tariff Threat Looms Over Foreign Cars

“I want them to be made in the USA, every type of car.”

Donald Trump, seeking re-election in the upcoming November U.S. elections, has consistently pushed forward ‘America First’ policies. Recently, there have been reports that Trump’s team is considering imposing a 60% tariff on Chinese products. The move is seen as an attempt to regain dominance in the U.S. auto industry by imposing tariffs on foreign cars.

Most foreign cars sold in the U.S. are produced in allied countries like South Korea, Japan, and Germany. Observers suggest that if Trump is re-elected, he could expand his first-term protectionist trade policies, applying indiscriminate tariffs even to allied countries. He considered imposing a 25% tariff on cars from South Korea and Mexico during his tenure. This could significantly impact Korean companies, and there are concerns that the world could be engulfed in a U.S.-initiating trade war.

“I will make all car factories built in the U.S.”

On the 28th (local time), former President Trump emphasized on social media Truth Social, “I will bring the auto industry back to the U.S..” He added, “All car workers should vote for me. I will use tariffs or other means to make China and other countries build factories in the U.S.”

He strongly criticized the chairman of the United Auto Workers (UAW), Sean Paine, who recently announced his support for President Joe Biden in the November elections. Trump argued, “Paine believes in Biden’s vision for electric cars made in China. Paine is selling out the auto industry to China.” In contrast, he said he would impose high tariffs on all cars not produced in the U.S., forcing car companies from various countries to build or move their factories to the U.S.

Notably, Trump claimed, “They (China) are building the world’s largest factory in Mexico and selling cars to the U.S. without tariffs.” This hinted at tariffs on Mexico, an ally, as it is known that major Chinese electric car companies are building factories in Mexico to circumvent the U.S. market. He further claimed, “55% of the auto industry has already left the U.S.,” and the remaining companies will leave the U.S. market if he is not re-elected.

In September of last year, he went to Detroit, Michigan, considered the hub of the U.S. auto industry. During his visit, he stated that under the Biden administration, many jobs were being outsourced to other countries such as Korea, Mexico, China, and Japan. He accused the Biden administration of supporting foreign auto industries harming U.S. auto workers.

Uncertainty on the Korean auto export front targeting North America

If former President Trump wins the election, it seems inevitable that Korean car companies will also be directly affected.

Hyundai and Kia sell about 40% of their locally produced vehicles in the United States. However, as more than half of the cars sold in the U.S. are produced domestically and exported, this creates uncertainty for Korean auto exports targeting North America. Kia has a factory in Mexico that accounts for over 60% of exports to the North American market. If trade tariffs are imposed on Mexico, it could be a problem for them.

However, many believe domestic companies that have already entered the U.S. market have local production capabilities, so even if Trump is elected, it would not be impossible to cope. Hyundai has a car factory in Alabama, and Kia has one in Georgia. The Hyundai Motor Group is also building a new electric car factory (Meta Plant) at the group level in Savannah, Georgia, with completion targeted for the second half of this year.

The Korea Trade Association recently predicted in a trade issue brief that “since the Trump camp has pointed to cars (including parts) from Korea, Japan, Europe, Mexico, and Canada as the cause of the U.S. trade deficit, there is a possibility that Korea will also be included in the ‘Universal Baseline’ tariff target countries.”