The threat of new U.S. tariffs on vehicle imports potentially stemming from a national security investigation may prompt more countries to enter into bilateral talks with Washington in hopes of securing exemptions. It is also prompting Japanese and South Korean carmakers to review their business strategies for the U.S., the Nikkei Asian Review reported.
Cars account for over 15% of overall U.S. imports, making them the largest category of products exported to the U.S. Japan alone exports 1.7 million four-wheeled vehicles a year to the U.S.
If the Trump administration imposes an up to 25% levy on imported cars, Japanese carmakers would need to ramp up their U.S. production to maintain sales in the event of a tariff increase, Nikkei said.
Twenty-six percent of Toyota Motor Corp.'s parent-only unit sales come from the U.S., as do 28% of Nissan Motor Co. Ltd.'s and 32% of Honda Motor Co. Ltd.'s, the Nikkei reported.
South Korean automakers are also monitoring the situation closely; more than 30% of the estimated 2.53 million vehicles they exported in 2017 went to the U.S., the Nikkei said.
The South Korean government and the Korea Automobile Manufacturers Association, which includes Hyundai Motor Co. and Kia Motors Corp. as members, held an emergency meeting May 25 to discuss a response.
The trade ministry convened a meeting with Hyundai, Kia and the Korean unit of General Motors Co. to discuss how the U.S. investigation could impact the local auto industry, Yonhap News reported.
"The government will have to respond to the move along with other major nations as it could expand trade protectionism and cause repercussions in global trade," Yonhap said, citing Paik Un-gyu, South Korea's minister of trade, industry and energy.
South Korean-made cars are exempted from U.S. duties based on the 2012 bilateral trade pact. But potential new tariffs "would add pressure on local carmakers to increase production in American factories in the long term," an unnamed local carmaker official told Yonhap.
The U.S. move comes after Seoul in March accepted U.S. demands for greater access to its car market in a revised bilateral free trade deal known as KORUS.
