Nikkei Expresses Concern Over "Korean Industry Hollowing Out" Due to Hyundai Motor's US Investment

"Trump Welcomes Investment but Makes No Mention of Exempting Korea from Tariffs"

The Nihon Keizai Shimbun (Nikkei) reported on the 26th that there are concerns about the hollowing out of Korean industry in relation to Hyundai Motor Group's announcement to invest a total of $21 billion (approximately 31 trillion won) in the United States by 2028.

Hyundai Motor Group Chairman Chung Eui-sun stood at the podium in the Roosevelt Room of the White House on the 24th (local time) to announce a large-scale investment plan in the United States, watched by U.S. President Donald Trump, Louisiana Governor Jeff Landry (far right), and U.S. House Speaker Mike Johnson (far left). On this day, Chairman Chung announced plans to invest $21 billion (approximately 31 trillion won) over the next four years, including the establishment of a steel plant in Louisiana. Photo by Reuters and Yonhap News.

Regarding Hyundai Motor's investment plan in the U.S., Nikkei pointed out that "establishing supply chains in the U.S. in response to tariffs imposed by the Donald Trump administration is aimed at protecting the U.S. market, Hyundai's largest sales country, but it could lead to the hollowing out of industry within Korea."

It also introduced an analysis by the Korea Institute for Industrial Economics & Trade, which forecasts that if production in the U.S. increases due to President Trump's tariffs, the annual production volume in Korea could decrease by 700,000 to 900,000 units, equivalent to about 20% of the current output.

Hyundai Motor Group plans to increase production by expanding factories in the U.S. and also intends to build a steel mill in Louisiana. Nikkei noted that it is not easy to quickly relocate supply chains to the U.S. in line with the tariff policies, and pointed out that manufacturing-related costs within the U.S. are also rising due to the tariff increases.

Nikkei reported that the price of steel scrap, which is the raw material used to produce steel at the electric arc furnace Hyundai Motor Group is constructing in the U.S., rose by 17% following President Trump's tariff announcement. It added that "the rise in steel scrap prices is a blow to steel companies," and that U.S. steel firms continue to suffer losses.

Furthermore, Nikkei stated, "While President Trump welcomed Hyundai Motor Group's large-scale investment, he did not mention exempting Korea from the tariff targets." It went on to criticize, saying, "Under the free trade system that has supported the global economy, resources worldwide have been efficiently allocated, and procurement and production systems have been established in the best locations," and that "the additional tariffs by the Trump administration destroy these supply chains and increase uncertainty in the global economy."

This content was produced with the assistance of AI translation services.