Highlights

  • US reaches framework agreements with six more countries.
  • South Korea, US sign framework agreement; several Section 232 tariffs drop to 15%, including autos/auto parts, while metals tariffs remain unchanged.
  • No significant impact to S&P Global Mobility sales, production forecast assumptions.

In November, the US reached further tariff agreements with Latin American countries including Argentina, Ecuador, El Salvador and Guatemala, as well as Liechtenstein and Switzerland. The US and South Korea signed an agreement outline, which includes dropping the Section 232 tariff on autos and auto parts to 15% effective Nov. 1.

South Korea and US sign framework

The most significant pieces of the agreement for the auto industries of both South Korea and the US are the automotive tariffs applying both to autos and auto parts. Published on Nov. 13 and signed on Nov. 14, the agreement states that the US Section 232 tariffs on autos, auto parts, timber, lumber and wood derivatives are reduced from 25% to 15%, effective Nov. 1, 2025.

However, there is some nuance: 

  • Some of these products may already carry a tariff equal or greater to 15% under the Korea-US Free Trade Agreement (KORUS FTA) or US Most Favored Nation (MFN) status. In that case, no additional Section 232 tariff would apply. 
  • If the KORUS FTA or MFN is less than 15%, the sum of the KORUS FTA or MFN and an additional 15% Section 232 tariff will apply. 

The Section 232 tariff rate on pharmaceuticals will be no greater than 15%. The US has not yet set the rate for the ongoing Section 232 investigation into semiconductors and semiconductor manufacturing.  

There is no reference to the Section 232 tariffs on steel, aluminum and copper; these tariffs are expected to hold at 50%. The US will remove supplemental tariffs for natural resources not available in the US and generic pharmaceutical-related goods. The US will also remove tariffs on certain aircraft and their parts.

The most significant non-tariff barrier (NTB) change for the auto industry is Korea’s decision to end the 50,000-unit cap on imports of US-origin vehicles that meet US Federal Motor Vehicle Safety Standards (FMVSS), a move that may further open the market to US automakers. 

Korea will also no longer require additional emissions certification documentation other than what is provided to US authorities. Other NTB clauses address agricultural goods, intellectual property rights, internationally recognized labor rights and environmental protections that “do not distort trade and investment.”

With respect to investment into the US, Korea’s previously announced US$350 billion commitment holds. This includes US$150 billion for the US shipbuilding industry and an additional US$200 billion “pursuant to the Memorandum of Understanding with respect to Strategic Investments (MOU), which is expected to be signed.”

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Liechtenstein and Switzerland: Most Section 232 tariffs unchanged, little impact on autos

The US also established new tariff arrangements with Liechtenstein and Switzerland, applying consistent treatment to both countries under a 1923 treaty. The Trump administration’s reciprocal tariff is 31% for Switzerland and 37% for Liechtenstein on goods not covered under Section 232 or other tariffs. It is not clear when the newly agreed-upon rates will be in effect.

Liechtenstein and Switzerland will apply a 0% tariff on all US industrial goods, US seafood, certain US agricultural goods and tariff rate quotas for other agricultural goods. The US will apply the higher of the MFN rate or a rate of 15% (MFN plus the reciprocal tariff) on most goods from these countries. Goods listed in the US Annex to Executive Order 14346 are subject only to the MFN rate.

For these countries, semiconductor and pharmaceutical goods Section 232 tariffs are significant, but the US will cap the combined MFN and Section 232 rate at 15%. Because neither country has automotive production, most tariffs affecting auto manufacturing remain unchanged. 

Switzerland agreed to “encourage and facilitate” at least US$200 billion investment across the US over the next five years. Liechtenstein will do the same with at least a US$300 million US investment, and the country will increase the number of jobs created by its private sector in the US by 50% over the next five years. 

Argentina, Ecuador, El Salvador and Guatemala: Minimal impact on the automotive industry

The US will remove the 10% reciprocal tariff on certain goods from these four countries but will continue to impose the MFN rate plus 10% on non-qualifying items. Section 232 tariffs are not included in the US trade agreements and are presumably unchanged. 

For El Salvador and Guatemala, the US will remove reciprocal tariffs on “certain qualifying exports that cannot be grown, mined, or naturally produced in the United States in sufficient quantities, as well as certain products, such as textiles and apparel products, originating under the CAFTA-DR [Central America-Dominican Republic-United States Free Trade Agreement].” 

For Argentina, the US will remove reciprocal tariffs on “certain unavailable natural resources and non-patented articles for use in pharmaceutical applications.” In addition, the US may “positively consider” the agreement’s impact on national security when evaluating Section 232 tariffs—though no specific actions have been defined. Argentina will provide preferential market access for US goods exports. 

For Ecuador, the US will remove reciprocal tariffs on “certain qualifying exports from Ecuador that cannot be grown, mined or naturally produced in the United States in sufficient quantities.” Ecuador is to reduce or eliminate tariffs in key sectors for the US and establish a tariff-rate quota for some agricultural goods. 

These US trade agreements do not include any specific investment commitments like those the US has negotiated with nearly every other country. However, the Argentina agreement states that the US and Argentina will “cooperate to facilitate investment and trade in critical minerals.”

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Key shared elements of the framework US trade agreements

Although each framework agreement is tailored to the specific country and US priorities, they contain some common elements. Each addresses NTBs tied to regulatory requirements and procedures in key industries. El Salvador and Guatemala will accept US vehicle standards, while Argentina will accept vehicles compliant with US FMVSS and emissions standards. (Ecuador does not have a similar provision.) 

Liechtenstein and Switzerland will work with the US on relevant international standards in line with World Trade Organization recommendations. For automobiles, Switzerland will recognize US FMVSS. 

All the US trade agreements include provisions to respect internationally recognized labor rights, and most prohibit the import of goods produced by forced or compulsory labor. 

The agreements also address broader trade measures, including digital trade and intellectual property protections. The Latin American agreements address facilitating digital trade, refraining from discrimination against US digital services or products and moving forward with intellectual property treaties and actions specific to each country that will improve intellectual property protections.  

Liechtenstein and Switzerland will continue not to place tariffs on US digital services or impose customs duties, and the two countries will discuss with the US “robust commitments” related to intellectual property rights protection and enforcement, including protections for geographical indications. 

South Korea agreed to ensure US companies do not face unnecessary barriers related to digital services and to facilitate cross-border transfer of data.

The Latin American agreements also tackle environmental, economic and security-related trade issues. Each country has committed to work with the US to strengthen economic and national security cooperation and enhance supply chain resilience, including combating duty evasion and cooperating on investment security and export controls. Argentina, El Salvador and Guatemala have all agreed to address “potential distortionary actions of state-owned enterprises” and subsidies that may affect bilateral trade.

South Korea agreement has largest impact on the auto sector

The South Korea-US trade agreement has the most impact on the automotive industry, primarily by lowering the Section 232 tariff on autos and auto parts from 25% to 15%, while also setting a 15% reciprocal tariff rate. Despite this reduction, the rates remain significantly higher than the free trade conditions South Korea enjoyed prior to the Trump administration. 

South Korea, along with Liechtenstein and Switzerland, also included commitments to invest in the US. The US trade agreements with Argentina, Ecuador, El Salvador and Guatemala will have a lesser overall impact on the auto sector. 

For automakers, the South Korea agreement provides relief for General Motors, the Hyundai Motor Group and Polestar, which plans to produce the Polestar 4 for US sale in South Korea beginning in 2026. In 2024, General Motors imported 414,768 units from South Korea to the US, primarily four affordable vehicles: the Chevrolet Trax and Trailblazer and Buick Envista and Encore GX. 

Hyundai Motor Group imported 984,637 units in 2024. Its Genesis brand imported 74,424 units from South Korea, nearly 100% of the brand’s US sales; Hyundai imported 531,943 units (63% of US sales in 2024) and Kia imported 382,270 units (48% of US sales). 

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This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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