Gyeongbuk Auto Parts Firms Face Crisis from U.S. Tariffs... Province Backs New Technology Development and Market Diversification

On August 20, the Gyeongbuk Provincial Government announced that it will implement a range of response measures to strengthen the competitiveness of the local automotive parts industry and support parts manufacturers, which are currently facing a crisis due to the imposition of a 15% tariff on automobiles and parts following the recent conclusion of tariff negotiations with the United States.

The U.S. automotive market is a key market, accounting for 49.1% of finished vehicle exports and 36.5% of parts exports. As of June 2025, exports to the U.S. amounted to $2.69 billion, down 16% compared to the same month of the previous year due to the impact of U.S. tariffs. Additionally, the proportion of domestic parts supplied to Korean vehicles produced in the U.S. averages 36.2%, making an increase in production costs inevitable.

Gyeongbuk Provincial Government Building

In response, the Gyeongbuk Provincial Government plans to enhance support for local automotive parts companies to help them overcome the crisis and achieve a new leap forward, focusing on three core pillars: reducing production costs, diversifying markets, and research and development (R&D) of new technologies.

First, the province will focus on automating and digitizing manufacturing processes to reduce production costs by improving processes that rely on manual labor. It will promote AI autonomous manufacturing projects that integrate artificial intelligence into manufacturing processes and support smart factory initiatives to automate production. In addition, the Manufacturing AI Center, linked to Gyeongbuk’s key industries, will provide tailored solutions and help resolve on-site challenges.

Second, the province will pursue a market diversification strategy to reduce reliance on the U.S. market. It will expand support for participation in overseas exhibitions to tap into emerging markets such as Europe, ASEAN, and Indonesia. The province will also assist companies in transitioning from traditional manufacturing to digital industries, thereby stabilizing the manufacturing supply chain and facilitating global cooperation for companies located in regional innovation convergence complexes, enabling them to overcome the current crisis by entering new markets.

Third, to secure long-term growth engines, the province will provide focused support for R&D of new technologies related to future vehicle parts. By fully utilizing the talent pool of local research institutions and securing government R&D projects, the province aims to promote research and development of high value-added parts. Through six ongoing national projects, including the establishment of an advanced electronic control parts ecosystem, the province will offer demand-driven business support services.

Furthermore, the province will provide access to advanced equipment, such as environmental durability testing facilities owned by local automotive research institutions, to alleviate the testing and certification burdens on companies and accelerate technology development.

Since April, the central government has also been working to minimize the impact of tariffs by expanding policy financing and offering export vouchers and export insurance premium discounts. The systematic, customized response strategy of the Gyeongbuk Provincial Government is expected to drive the sustained growth of the local automotive parts industry.

Gyeongbuk Governor Lee Cheolwoo stated, "We will turn the crisis caused by the U.S. tariff agreement into an opportunity to improve productivity and pioneer new markets for our companies. We will mobilize all administrative resources to ensure that Gyeongbuk’s automotive parts companies maintain their competitiveness and lead the era of future vehicles without wavering. We will spare no practical support to help companies overcome current challenges and create new opportunities."

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