South Korea saw a drop in its exports of auto parts to the United States in 2025, marking the first decline in five years. Data revealed that shipments of automotive parts to the U.S. decreased by 6.7 percent to US$7.67 billion last year. This shift came as domestic automakers in the U.S. increased their reliance on local sourcing due to tariff measures.
Over the past few years, exports to the U.S., South Korea’s largest overseas market, had been steadily rising. The figures climbed from $6.91 billion in 2021 to $8.03 billion in 2022, $8.08 billion in 2023, and $8.22 billion in 2024. However, the trend reversed in 2025 with the decline in exports.
The Korea Auto Industries Cooperative Association highlighted that the proposed 25 percent tariffs on auto imports during the Donald Trump administration had a significant impact on South Korea’s automotive exports and the industry as a whole. This situation led automakers like Hyundai Motor Co. and Kia Corp. to enhance their local parts procurement within the U.S.
Following the imposition of a 25 percent tariff on imported auto parts by the U.S. in May of the previous year, an agreement between Seoul and Washington resulted in a reduction of tariffs on South Korean auto parts to 15 percent, effective retroactively from November 1. Despite this, there were threats from Trump to increase tariffs on South Korea to 25 percent from 15 percent, citing delays in the parliamentary process for a special investment bill related to a trade deal between the two countries.
Under the trade agreement, South Korea committed to investing US$350 billion in the U.S. and other pledges in exchange for the U.S. lowering reciprocal tariffs on South Korean goods.
