US auto tariffs to reduce Korean car production by 315,000 units

Export vehicles lined up at Pyeongtaek Port in Gyeonggi Province Yonhap — Cars awaiting export at Pyeongtaek Port in Gyeonggi Province. Yonhap

SEOUL, April 24 (AJP) - South Korea’s passenger vehicle production is projected to fall by more than 300,000 units over the next two years as a result of newly imposed U.S. automotive tariffs, according to a report released Thursday by S&P Global Mobility.

The research firm estimates that South Korean output will drop by 112,000 vehicles in 2025 and a further 203,000 in 2026, as a 25 percent tariff introduced by the Trump administration begins to take its toll. S&P cited not only the trade restrictions but also ongoing political uncertainty as compounding factors affecting the country’s automotive sector.

The impact is expected to be felt more broadly across the globe. S&P forecasts that global passenger vehicle production will shrink by 944,000 units this year and another 778,000 next year due to the tariffs.

Japanese automakers are projected to cut production by 300,000 units annually through 2026, for a total of 600,000 vehicles. In China, passenger car output is expected to decline by 198,000 units in 2025 and 503,000 units the following year.

Ironically, the tariffs — intended to bolster U.S. automotive manufacturing — may instead suppress it. S&P predicts that North American production will fall in parallel with global trends, decreasing by 944,000 units in 2025 and 778,000 in 2026. If realized, the drop would mark the steepest contraction since the COVID-19 pandemic.

The firm projects that by 2027, production in North America could stabilize at around 15.47 million units, buoyed in part by increased local manufacturing investments from foreign automakers such as BMW and Honda, who are adjusting to the new trade environment.

“Tariffs are expected to significantly threaten global passenger car production for at least the next two years,” the report said, adding that “North America appears to be the hardest hit.”

S&P also forecast that current tariff levels will remain in place through 2026, before dropping to 15 percent in 2027 for most markets. Canada and Mexico would see a slightly lower rate of 12 percent under the revised structure.

Candice Kim candicekim1121@ajupress.com