Trump's 25% tariff threat on Korean autos puts Hyundai Motor India in spotlight

On Monday, January 27, 2026, President Donald Trump announced he was raising tariffs on South Korean automobiles from 15% to 25%, along with increases on lumber and pharmaceutical products. The escalation came in response to what Trump characterized as Seoul's legislature failing to ratify a trade agreement the two countries had negotiated and reaffirmed multiple times over the preceding months. In a post on Truth Social, Trump laid out his reasoning with directness: the US had already moved to reduce its own tariffs in line with what had been agreed, and he expected South Korea to do the same. The delay in legislative approval, he suggested, left him no choice but to act unilaterally.

The timing of the announcement put Hyundai Motor India in an unexpected spotlight. Hyundai Motor, South Korea's largest exporter of vehicles to the American market, would face the brunt of the new tariff regime if it took effect. Shares of the Indian subsidiary were expected to draw investor attention when markets opened on Tuesday, as traders weighed the implications of a 10-percentage-point tariff increase on a company whose export business had become a critical part of its financial performance.

The backdrop to Trump's move stretched back to July 2025, when he and South Korean President Lee had reached what both sides called a historic trade agreement. The two leaders reaffirmed the terms during Trump's visit to Korea on October 29, 2025. Yet months later, South Korea's National Assembly had not formally approved the deal. Trump's frustration was evident in his public statement: he questioned why the Korean legislature had not enacted what he saw as an agreement already settled at the presidential level. The legislative delay, he made clear, was the direct cause of the tariff increase.

Hyundai's recent sales figures offered a mixed picture heading into this tariff threat. In December 2025, the company reported total sales of 58,702 units, representing a 6.6% increase compared to December 2024. Yet the month-to-month trend was softer. November had seen 66,840 units sold, meaning December represented a decline of roughly 8,000 units sequentially. Domestic sales fell more sharply, dropping 15.7% from November's 50,340 units to 42,416 units in December. Export volumes also slipped, declining 1.3% from 16,500 units in November to 16,286 units in December.

What provided some cushion was the year-on-year export performance. Despite the sequential slowdown, Hyundai's exports in December grew 26.5% compared to the same month a year earlier, continuing a trend of strong annual growth that had also characterized November, when exports rose 26.9% year-on-year. This export strength had been a bright spot for the company even as domestic Indian sales faced headwinds. The November figures had shown total sales growth of 9.1% year-on-year, though that was aided by only a modest 4.3% increase in domestic volume, meaning exports had carried much of the weight.

The tariff threat now cast uncertainty over that export trajectory. A 25% tariff on South Korean autos would significantly raise the cost of Hyundai vehicles entering the US market, potentially dampening demand and forcing the company to absorb costs or pass them to consumers. For Hyundai Motor India, which has positioned itself as a manufacturing and export hub, the implications extended beyond immediate sales figures to questions about the company's strategic role in its parent's global supply chain. Investors would be watching closely to see how Seoul's government responded to Trump's ultimatum and whether the legislative logjam on the trade agreement would finally break under the pressure of escalating tariffs.