South Korea seeks resolution on U.S. auto tariffs in upcoming trade talks

Seoul to prioritize urgent negotiations on 25% auto tariffs as trade tensions escalate with the United States.

A car carrier transporting Kia vehicles, part of South Korea’s Hyundai Motor Group, arrives at Pyeongtaek port in Pyeongtaek, South Korea, on April 15, 2025. Photo by Kim Hong-Ji/Reuters

By Anna Fadiah and Hayu Andini

South Korea seeks resolution on U.S. auto tariffs during high-stakes trade talks in Washington, as Seoul's Industry Minister Ahn Duk-geun stated on Wednesday that urgent steps will be taken to address the 25% levy imposed on automobile exports. The move comes amid rising concern over the economic impact of U.S. protectionist measures, which threaten to destabilize South Korea’s lucrative auto sector.

The minister’s remarks were delivered just before departing for Washington, where officials from both sides are scheduled to meet on Thursday. The primary objective for South Korea is to minimize damage from steep tariffs on auto and steel exports that were announced as part of a broader 10% blanket tariff plan introduced by the Biden administration.

Although the reciprocal 25% tariffs on South Korean goods have been suspended for 90 days, the pressure to find a long-term solution remains intense. South Korea’s automobile industry, which heavily depends on exports to the U.S., is now bracing for difficult negotiations.

A major export sector under pressure

Auto exports from South Korea have been a cornerstone of its economy for decades. In 2024, vehicles shipped to the United States accounted for nearly half—49%—of South Korea’s total auto exports, generating an estimated $34.7 billion. Automakers such as Hyundai Motor and Kia Motors stand to lose billions if tariffs remain in place or become permanent.

Recent trade data indicates a growing urgency. During the first 20 days of April 2025, overall exports from South Korea declined by 5.2% compared to the same period in the previous year. U.S.-bound shipments, in particular, were a major contributing factor to the drop. Exports of automobiles fell by 6.5%, and shipments of auto parts declined by 1.7%.

In response, the South Korean government rolled out emergency support measures aimed at cushioning the impact on the auto industry. These include financial relief packages, tax incentives for exporters, and targeted support for manufacturers most exposed to the U.S. market.

Industry Minister Ahn said, “We are preparing for negotiations calmly and carefully. However, in the case of automobiles that are heavily hit by 25% tariffs now, we plan to do our best to come up with a solution as soon as possible.”

Diplomatic overtones: Defense cost sharing may enter discussions

While auto tariffs remain the primary concern, South Korean officials are also preparing for the possibility that the issue of U.S. troop defense costs will be introduced during talks. There are currently about 28,500 American troops stationed in South Korea, a legacy of the Korean War and a critical component of the United States' Indo-Pacific defense strategy.

Former President Donald Trump has repeatedly called for South Korea to pay more for the U.S. military presence. Although South Korean officials have traditionally resisted reopening these negotiations, the shifting political landscape in Washington means the matter could return to the table. Minister Ahn acknowledged this possibility, indicating that Seoul is prepared should defense cost-sharing be raised in parallel with trade issues.

“Negotiations with the United States often evolve beyond economic matters,” Ahn said. “We must be ready for a comprehensive discussion that may include security cooperation and cost-sharing.”

Political and economic stakes grow ahead of U.S. election cycle

The timing of the trade talks adds an additional layer of complexity. With the U.S. presidential election looming in November 2025, trade and foreign policy have become hot-button issues on the campaign trail. Any perceived concessions or failures could be weaponized politically by candidates eager to project strength on economic nationalism and military alliances.

In South Korea, too, domestic pressure is mounting on President Yoon Suk-yeol's administration to protect key industries and prevent job losses in an economy already facing inflationary pressures and slowing global demand.

South Korean lawmakers across party lines have urged the government to take a firm stance in the negotiations, with some calling for retaliatory tariffs should Washington push ahead with protectionist measures.

Broader implications for global trade and U.S. alliances

The outcome of these talks could send ripples beyond just U.S.-South Korea relations. Other key U.S. allies like Japan and Germany—also major auto exporters—are closely monitoring developments, as they too face the threat of punitive tariffs on industrial goods.

For Washington, the imposition of tariffs is seen by some analysts as part of a broader strategy to reduce trade deficits and reshore manufacturing. However, critics warn that such policies could strain alliances and backfire economically by triggering retaliatory measures and legal challenges at the World Trade Organization.

South Korea, which has long aligned its economic and security policies with the U.S., now finds itself at a crossroads. “We value our relationship with the United States, but we must act in the best interests of our industries and our people,” Ahn said before boarding his flight to Washington.

Industry response and next steps

Executives in South Korea’s automotive industry have welcomed the government’s proactive stance but warn that prolonged uncertainty could affect future investment decisions.

A spokesperson for Hyundai said, “We are working closely with government authorities to monitor the outcome of the trade talks. Any increase in tariff burdens could have long-term effects on our global strategy, particularly in the North American market.”

Kia Motors echoed similar sentiments, stating that a stable and predictable trade environment is essential for planning production schedules and maintaining supply chain integrity.

If negotiations yield no breakthrough, companies may have to absorb the additional costs or pass them on to U.S. consumers, potentially affecting market share in the world’s second-largest auto market.

Conclusion of first round of trade talks expected by Friday

As South Korea seeks resolution on U.S. auto tariffs, both sides are expected to conclude the initial round of trade discussions by the end of this week. While there is cautious optimism that progress can be made, sources familiar with the agenda say that no major announcements are likely before a second round is scheduled later in May.

For now, South Korea is betting on diplomacy, but with contingency plans in place should talks falter. The stakes—for industries, economies, and international relations—could hardly be higher.