Trump Tariffs Could Spell Trouble for GM Korea

Fresh off its multi-billion dollar bailout, GM’s Korean division is at risk again following a “national security” investigation into car and component imports launched by the White House.

The conclusions of the investigation could lead to a 25% tariff on the imported vehicles and automotive components.

“This is a matter that could make or break GM Korea,” one person familiar with the situation told Reuters. “The success of its restructuring plan hinges on more production for exports, and the two new models to be manufactured here are primarily targeted at the U.S. market to serve that purpose.”

It was only a few weeks ago that GM and the South Korean government pledged billions of dollars in investments to keep GM from pulling out of the Korean market and shutting down its local plants.

As indicated, a major part of GM’s plan for bringing GM Korea back to profitability was investment in a pair of new vehicles that would be relevant to the US market, thereby extending its dependence on exporting vehicles to the US. Already, though, roughly a quarter of GM Korea’s exports head to the US.

GM Korea would still have its biggest export market, China, to depend on, but with a quarter or more of its already struggling sales gone, it would struggle to be profitable, something which GM values above all else currently.

The tariffs would also affect GM more generally because many of its best rated suppliers are from South Korea.

[source: Reuters]

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