Why GM sticks with Korea production despite looming 25% tariff
General Motors, one of the top three automakers in the US, remains committed to leveraging South Korea as a vital production hub for its budget cars, despite the looming 25 percent tariff imposed by President Donald Trump.
According to a GM official cited by Bloomberg on Wednesday, the automaker reaffirmed its commitment to Korean operations, the production base for its cheaper models, including the Chevrolet Trailblazer sport utility vehicle, the Buick Encore GX SUV and the Buick Envista crossover.
This comes after GM Chief Financial Officer Paul Jacobson told reporters last week that the company plans to reduce costs to offset 30 percent of the tariff impact, rather than raising vehicle prices or relocating overseas operations to the US. In its annual earnings guidance released on May 1, GM revised its projected earnings before interest and taxes from a range of $13.7 billion–$15.7 billion to $10 billion–$12.5 billion, indicating approximately $4 billion–$5 billion in anticipated tariff-related burdens on imported automobiles and parts.
Despite the unfavorable optics of maintaining Korean production under the new tariffs, industry insiders here say GM is betting that upcoming Seoul–Washington trade negotiations will be pivotal for its global manufacturing strategy.
'I've heard that GM's Detroit headquarters is closely monitoring the bilateral trade discussions while actively lobbying the Trump administration,' said an industry source familiar with the matter, speaking on condition of anonymity. 'The key issue will be whether the Korean government can reduce the auto tariff rate to a level that allows GM to remain operational in Korea.'
Next week, US trade representative Jamieson Greer is scheduled to visit Korea to attend the APEC Trade Ministers' Meeting, where he will meet with Korean officials to review the "reciprocal tariffs" set to take effect in July. This will mark the first high-level US trade visit since the beginning of Trump's second term.
Lee Ho-geun, a car engineering professor at Daeduk University, echoed this view, noting, 'GM has long relied on its Korean unit's cost-effective production to build cars priced around $20,000. It's extremely difficult to manufacture these economical models in the US, which has a more expensive supply chain, partly due to constant wage hike demands from the United Auto Workers.'
However, Lee warned that if trade talks fail and the 25 percent tariffs on cars and parts remain in place until 2027 — when GM's agreement with the Korean government to maintain plant operations expires — the automaker may seriously consider withdrawing from Korea. 'With the tariffs, the price of budget models like the Trailblazer could increase by more than $5,000, negating any cost advantage from Korean production. If the tariff burden outweighs the benefits, GM could relocate production to North America,' he said.
Meanwhile, Yoon Myong-ok, chief marketing officer at GM Korea, said during a media conference on April 16 that the Bupyeong plant in Incheon received an additional order of 21,000 units from US headquarters. The facility's projected production volume is expected to rise from 208,000 to approximately 230,000 units.
GM operates three manufacturing plants in Bupyeong and Changwon, South Gyeongsang Province. In 2024, 84.8 percent of its production was exported to the US.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Korea Herald
2 hours ago
- Korea Herald
Trump says US could unveil semiconductor tariffs next week
WASHINGTON -- US President Donald Trump said Friday his administration will unveil tariffs on semiconductor imports as early as next week, as South Korean tech firms Samsung Electronics Co. and SK hynix Inc. have been carefully watching his tariff policy developments. Trump made the remarks in a meeting with reporters aboard Air Force One, as he was en route to Alaska for talks with Russian President Vladimir Putin -- the high-stakes meeting where Trump is seeking to broker a halt to the war in Ukraine. "Chips and semiconductors, we'll be setting sometime next week, (or) the week after," Trump said, according to a White House press pool report. He did not elaborate on the exact tariff rate, but said there would be a tariff increase from a "lower" rate to a "very high" rate. "Well, I'm going to have a rate that is going to be lower at the beginning. Then that gives them a chance to come in and build. And very high after a certain period of time," he said. "And if they don't build here, they have to pay a very high tariff." Last week, Trump said his administration will impose a tariff of about 100 percent on chips, as he is pushing to strengthen semiconductor production in the U.S. To impose the tariffs, Trump has invoked Section 232 of the Trade Expansion Act of 1962, a law that provides the president with the authority to adjust imports into the US when he determines they threaten to impair national security. (Yonhap)
Korea Herald
2 hours ago
- Korea Herald
No deal to end Russia's war in Ukraine after Trump rolls out red carpet for Putin
Alaska (AP) — President Donald Trump failed to secure an agreement from Vladimir Putin on Friday to end Russia's war in Ukraine, falling short in his most significant move yet to stop the bloodshed, even after rolling out the red carpet for the man who started it. They were expected to give a joint news conference at the end of their talks, but took no questions from reporters and offered scant details. Instead, Putin said they had hammered out an 'understanding' on Ukraine and warned Europe not to 'torpedo the nascent progress.' Trump said they had made 'great progress' at their summit, but there were still sticking points. 'There's no deal until there's a deal,' the US president said. He said he would call Ukrainian President Volodymyr Zelenskyy and European leaders to brief them on the talks, which lasted about two hours. Trump, who for years has balked at American support for Ukraine and expressed admiration for Putin, had pledged confidently to bring about an end to the war on his first day back in the White House. Seven months later, after berating Zelenskyy in the Oval Office and stanching the flow of some US military assistance to Kyiv, Trump could not bring Putin even to pause the fighting, as his forces made gains on the battlefield. Trump had offered Putin both a carrot and a stick, issuing threats of punishing economic sanctions on Russia while also extending a warm welcome at Joint Base Elmendorf-Richardson in Anchorage, but he appeared to walk away without any concrete result on ending the war in Ukraine, now in its fourth year. The US president had wanted to show off his deal-making skills, while Putin had the opportunity to try to negotiate a deal that would cement Russia's gains, block Kyiv's bid to join the NATO military alliance and eventually pull Ukraine back into Moscow's orbit. 'We had an extremely productive meeting, and many points were agreed to,' Trump said. 'And there are just a very few that are left. Some are not that significant. One is probably the most significant, but we have a very good chance of getting there.' He continued: 'We didn't get there.' Zelenskyy and European leaders were excluded from Trump and Putin's discussions, and Ukraine's president was left posting a video address before the meeting in which he expressed his hope for a 'strong position from the US' For Putin, just being on US soil for the first time in more than a decade was validation after his ostracization following his invasion of Ukraine. His meeting with Trump may stall the economic sanctions that the US president had promised unless Moscow works harder to bring the fighting to a close. It may now simply lead to more meetings, giving his forces more time to make progress on the battlefield. Putin thanked Trump for the 'friendly' tone of their conversation and said Russia and the United States should 'turn the page and go back to cooperation.' He praised Trump as someone who 'has a clear idea of what he wants to achieve and sincerely cares about the prosperity of his country, and at the same time shows understanding that Russia has its own national interests.' 'I expect that today's agreements will become a reference point not only for solving the Ukrainian problem, but will also mark the beginning of the restoration of businesslike, pragmatic relations between Russia and the US,' Putin said. Despite not reaching any major breakthrough, Trump ended his remarks by thanking Putin and saying, 'We will speak to you very soon and probably see you again very soon.' When Putin smiled and offered, 'next time in Moscow,' Trump said 'That's an interesting one,' and said he might face criticism, but 'I could see it possibly happening.' Trump and Putin had greeted each other with a warm handshake, chatting almost like they were old friends, and gripped hands for an extended period of time on a red carpet rolled out at the military base. As they chatted, Putin grinned and pointed skyward, where B-2s and F-22s — military aircraft designed to oppose Russia during the Cold War — flew overhead. The two then shared the U.S. presidential limo known as 'The Beast' for a short ride to their meeting site, with Putin offering a broad smile as the vehicle rolled past the cameras. It was the kind of reception typically reserved for close US allies and belied the bloodshed and suffering in the war Putin started in Ukraine. Although not altogether surprising considering their longtime friendly relationship, such outward friendliness before hours of closed-door meetings likely raised concerns from Zelenskyy and European leaders, who fear that Trump is primarily focusing on furthering U.S. interests and not pressing hard enough for Ukraine's. White House press secretary Karoline Leavitt said shortly before Air Force One touched down that the previously planned one-on-one meeting between Trump and Putin would be a three-on-three discussion, including Secretary of State Marco Rubio and special envoy Steve Witkoff. Putin was joined by Foreign Minister Sergey Lavrov and foreign affairs adviser Yuri Ushakov. The change seemed to indicate that the White House was taking a more guarded approach than it did during a 2018 meeting in Helsinki, where Trump and Putin met privately with their interpreters and Trump then shocked the world by siding with the Russian leader over US intelligence officials on whether Russia meddled in the 2016 campaign. Zelenskyy's exclusion was also a heavy blow to the West's policy of 'nothing about Ukraine without Ukraine' and invites the possibility that Trump could agree to a deal that Ukraine does not want. Russia and Ukraine remain far apart in their demands for peace. Putin has long resisted any temporary ceasefire, linking it to a halt in Western arms supplies and a freeze on Ukraine's mobilization efforts, which are conditions rejected by Kyiv and its Western allies. The meeting comes as the war has caused heavy losses on both sides and drained resources. Ukraine has held on far longer than some initially expected since the February 2022 invasion, but it is straining to hold off Russia's much larger army, grappling with bombardments of its cities and fighting for every inch on the over 600-mile (1,000-kilometer) front line. Alaska is separated from Russia at its closest point by just 3 miles (less than 5 kilometers) and the international date line. Joint Base Elmendorf-Richardson was crucial to countering the Soviet Union during the Cold War. It continues to play a role today, as planes from the base still intercept Russian aircraft that regularly fly into US airspace.
Korea Herald
13 hours ago
- Korea Herald
Lee vows for safe, peaceful, people-powered nation in special ceremony
President Lee Jae Myung pledged to place the Korean people at the heart of his administration's vision upon receiving 80 letters of appointment from 80 citizens in a special ceremony, underscoring the legitimacy of his mandate from the people. 'We will build a Korea that truly belongs to the people — a nation where every citizen's potential is nurtured, where our national strength grows in step with your happiness and where that power is shared by all,' Lee said during the ceremony held at Gwanghwamun Square in Jongno-gu, central Seoul. 'At the center of the future we dream of will always be you, the great people of the Republic of Korea.' In his speech, Lee also addressed concerns regarding public safety. 'We hear the residents of Daeseong-dong, Paju, also known as the 'Freedom Village,' who long to live without war, without fear, and the bereaved families who demand that no more lives be unjustly taken in national tragedies,' Lee added. 'We will do everything in our power to make Korea a peaceful and safe place for all.' The event was held on the 80th Liberation Day, emphasizing the nation's foundation as deriving its power from the people. Each representative stepped onto a circular stage and placed a personally written letter of appointment to the president, who began his term with a brief inauguration after being elected on June 3. Of the 80 representatives, NCSoft's artificial intelligence division CEO Lee Yeon-soo presented her letter last, personally handing it to the president. 'As a scientist and technologist who carries the mission to develop AI that understands Korea's history and cultural industries without relying solely on foreign technologies, I appoint this person as the President of the Republic of Korea to lead the nation toward becoming a global AI powerhouse,' the CEO wrote in her letter of appointment, referring to Korea by its official name. Friday's evening event was adorned with cultural celebrations, including a traditional percussion "gilnori" performance with Korean instruments such as the sogo, janggu and buk, accompanied by the song 'Heya' sung by rock singers Jeong Hong-ill and Yun Seong. TDYA — a project girl group formed in celebration of Liberation Day, consisting of YouTube creator Unjunging, rapper Mirani, singer Hyun-jin of girl group Loona and dancer Amy — also took to the stage to perform 'Keep The Light.' Korean American singer-songwriter Ejae, the artist behind 'Golden' from the hit Netflix animated film 'K-pop Demon Hunters,' composed the track for the 80th anniversary of Korea's liberation from Japanese occupation. TDYA's stage was followed by a cheerleading performance by Big Tide Cheerleading, accompanied by songs such as "To You" by Shin Hae-chul and "Time of Our Life" by Day6, which were anthems played during the protests against former President Yoon Suk Yeol. Following the letters of appointment ceremony, a drone show and media projections decorated the Gwanghwamun Square. They were followed by a dance performance by street dance crew The Stories, a taekwondo performance by Tae Kwon Han Ryu as well as musical performances by singers Sandeul, Jung Eun-ji, girl group Izna and Lee Seung-hwan. Former President Moon Jae-in and his wife, family members of the late former President Roh Moo-hyun, as well as religious and business leaders and various public figures, were also in attendance. A total of 3,500 members of the public selected through an online application process were present at Friday's event.
