Hyundai Strikes Deal to Dodge Trump’s Tariffs
TL/DR –
Hyundai Motor Group has committed $21 billion to avoid the threat of tariffs from the Trump administration. The investment will boost US automobile production capacity, enhance steel operations, increase localization, and reinforce supply chains, generating over 100,000 jobs in the US by 2028. Other automakers such as Honda, Nissan, Rolls-Royce, Volvo, and Volkswagen are also considering US expansions to dodge potential tariffs and gain a competitive advantage over US manufacturers reliant on Mexican production.
Hyundai Evades Trump’s Tariffs with $21 Billion Expansion in the U.S.
Hyundai Motor Group has successfully maneuvered around tariff threats by the Trump administration with a hefty $21 billion investment. This move will significantly boost its U.S. automobile production and steel operations, and establish energy infrastructure like EV charging networks.
Committed on March 24, $9 billion of the investment will be allocated to raising its U.S. car production capacity to 1.2 million units annually. An additional $6 billion will be used to improve steel operations, localization, and supply chains. The remaining $6 billion will be invested in the development of energy infrastructure.
This investment doubles the $20.5 billion that Hyundai has invested in the U.S. since 1986. It is projected to create over 100,000 direct and indirect jobs by 2028, which includes 14,000 direct, full-time employment opportunities.
The White House praised the investment as “evidence that President Trump’s economic policies are effective.”
This move signifies a strategic shift for Hyundai, which in 2021 relocated the production of 70,000 sedans from an Alabama factory to South Korea in an effort to bolster domestic employment.
In the following year, President Biden’s Inflation Reduction Act stimulated the U.S. manufacturing sector with billions of dollars of funding, also providing tax credits and grants to encourage companies to enhance production facilities, particularly in support of a greener economy. This act led to Hyundai reinvesting $7.6 billion in EV manufacturing near Savannah, Georgia by 2024.
Hyundai’s executive chair, Euisun Chung, noted that a 2019 meeting with Trump in Seoul spurred these expansion plans in Georgia. This decision led to a tariff exemption for South Korea.
“Hyundai will be producing steel and cars in America, hence they won’t have to pay any tariffs,” Trump stated during a White House meeting with Chung.
Hyundai isn’t the only automaker adapting to avoid new tariffs. Companies including Honda, Nissan, Rolls-Royce, Volvo, and Volkswagen are contemplating U.S. expansions as Trump threatens to impose 25% tariffs on products from Canada and Mexico in April. By escaping tariffs through their U.S. factories, these companies might gain a competitive advantage over Detroit-based rivals like Ford and GM, which continue to depend on Mexican production.
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