Vehicles awaiting export fill loads in Pyeongtaek on Dec. 1, 2025. (Yonhap)
The US has lowered the tariff fee on Korean vehicles and parts to fifteen%, a fee that can retroactively apply to all vehicles and components imported since Nov. 1.
The US Commerce Division and US Commerce Consultant printed the measures within the Federal Register on Thursday. Korean vehicles can now compete with their Japanese and European counterparts within the US beneath equal pricing situations.
In accordance with the discover within the Federal Register, tariffs on Korean vehicles and parts, which have been applied at a fee of 25% since April and Might, will now be lowered to a fee of 15%.
The adjusted tariff fee can be utilized retroactively again to Nov. 1, as agreed to by the 2 international locations based mostly on the timing of the Nationwide Meeting introducing a particular invoice to type a fund for investing within the US.
Nonetheless, the US defined that the 25% tariff on pick-up vans, which applies globally, will stay.
The US authorities additionally introduced tariff exemptions for sure plane and plane components, as was agreed throughout commerce talks. The US may even waive its 50% tariff on metal, aluminum, and copper that go into plane and plane components.
Korean timber and lumber, which had been subjected to a 25% tariff beneath Part 232 of the Commerce Growth Act of 1962, will now be tariffed at a fee of 15%. Tariffs on lumber used for merchandise like kitchen cupboards and vanities had been anticipated to go as much as 50% beginning Jan. 1, however the fee of 15% will apply.
Merchandise subjected to tariff charges above the 15% provided to most-favored-nation international locations can be tariffed at 15% in the event that they meet situations stipulated by the free commerce settlement between the US and South Korea.
The US introduced that changes to tariffs on plane and parts, lumber merchandise, and merchandise that fall beneath most-favored-nation clauses can be utilized retroactively to Nov. 14, the day when the US and South Korea signed an MOU on “strategic investments.”
The adjusted tariff fee for vehicles and different product classes appears to replicate the 15% reciprocal tariff fee that has been utilized since Aug. 7.
On July 30, after the US and South Korea had mentioned that they had come to a broad settlement of their tariff negotiations, the US introduced that its reciprocal tariff fee of 25% on Korean items can be lowered to fifteen%, however {that a} 25% tariff on vehicles would stay unchanged. This remaining tariff fee was leverage utilized by Washington to get South Korea to comply with an funding of US$350 billion within the US.
The implementation of the ultimate phrases of the commerce deal has largely eased the uncertainty that had plagued Korean exports to the US.
Korean vehicles’ predominant competitors within the US market comes from Japan and Europe. Japanese and European vehicles have been having fun with a 15% tariff fee since August and September, placing Korean vehicles at a substantial drawback.
Earlier than April, Korean vehicles had been exempted from US tariffs solely, because of the 2 international locations’ free commerce settlement, whereas Japanese and European vehicles had been subjected to a tariff fee of two.5%. After having fun with this benefit for years, the sudden shift to Korean vehicles dealing with a 25% tariff, in comparison with the 15% levied on their Japanese and European counterparts, put Korean automakers at a drastic drawback.
For Hyundai and Kia, a 25% tariff ends in an extra 1 trillion received (US$678 billion) of prices per thirty days. That means that reducing the tariff fee by 10% might end in a refund of round 300 billion (US$204 million).
Nonetheless, refunds might differ in response to when shipments reached the US and the way provides had been transported and managed.
The Korea Chamber of Commerce and Business and enterprise teams welcomed the bulletins on the brand new tariff charges, calling them a “base for additional stabilizing methods for exporting to the US.”
On the similar time, the chamber of commerce mentioned that the presently agreed tariff fee is “nonetheless a burden to Korean business, as there are nonetheless product classes subjected to separate tariffs,” in reference to the unresolved scenario concerning excessive tariff charges on metal and different product classes.
The group expressed hope that the US and Korea will proceed bilateral discussions that result in additional tariff reductions.
By Lee Bon-young, senior employees author
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