In an unexpected twist for the global automotive supply chain, South Korea’s automobile exports took a noticeable hit in April 2025, driven by a sharp decline in shipments to the United States. The root cause: Washington’s reimposition of steep tariffs on foreign-made vehicles—a move reminiscent of the protectionist measures once spearheaded by former President Donald Trump. For India, an emerging hub in the global auto and EV industry, the ripple effects of this trade disruption present both a cautionary tale and a potential window of opportunity.
According to data from South Korea’s Ministry of Trade, Industry and Energy, the total value of South Korean automobile exports fell 3.8% year-on-year to USD 6.53 billion in April. The most dramatic plunge came from the US market, where exports dropped 19.6% to USD 2.89 billion. North America as a whole saw a 17.8% decline in shipments, underlining how dependent South Korea remains on this critical export region.
In stark contrast, exports to the European Union surged by 26.7%, thanks largely to the success of electric models like Kia's EV3 and Hyundai's Casper Electric. On the domestic front, the mood is more optimistic, with April marking the third consecutive month of rising car sales, led by strong performances in EVs and hybrids.
The 25% import tax that went into effect on April 3, 2025, is essentially a revival of Trump-era trade policy. Though the Biden administration initially rolled back some of these protectionist measures, the political tide in the US seems to be shifting back toward economic nationalism—possibly in response to pressures from domestic automakers and labor unions facing increasing competition from foreign EVs.
This isn’t the first time South Korea has found itself in the crosshairs of American trade recalibrations. In 2018, steel and auto exports were similarly impacted under the “America First” policy banner. Then, as now, South Korea had to scramble to negotiate waivers or adjust production strategies.
The latest round of tariffs comes at a time when Korean automakers are gaining significant traction globally—especially in the EV space, where they’re seen as innovation leaders. The tariffs risk slowing down that momentum, especially in the world’s second-largest auto market.
While India isn't directly affected by the US tariffs on South Korean cars, the second-order effects could prove significant.
Shift in Export Strategy: South Korean automakers may look to diversify export destinations, potentially increasing focus on India and Southeast Asia. Already a strong manufacturing base for Hyundai and Kia, India could become an even more strategic hub for global supply.
Competitive Advantage for Indian EV Exports: As global automakers reevaluate US market routes, India could emerge as a more favorable origin point for affordable EVs and hybrids—especially if trade incentives and FTAs with the US or EU are strengthened.
Policy Reflections: India must take note of how dependent trade models can be vulnerable to geopolitical policy shifts. The South Korean experience underlines the importance of market diversification and domestic consumption strength—a lesson India can integrate into its own “Make in India” and “Atmanirbhar Bharat” frameworks.
Consumer Dynamics: If exports slow down, we could see more Korean models—especially EVs—redirected toward the Indian market. This may result in lower prices or better feature offerings in India, at least temporarily, as brands look to maintain volumes
Trade wars in the auto sector have often led to long-term strategic changes:
US-Japan in the 1980s: Led to Japanese automakers building plants in the US and a long-term shift in strategy.
US-EU auto tariff threats under Trump: Resulted in temporary freezes and a rebalancing of import-export flows.
Brexit: Forced EU automakers to reallocate some of their UK-bound production and rethink supply chain efficiencies.
In each case, disruptions opened new opportunities for emerging markets and forced automakers to adapt by localizing production or diversifying destinations. The current South Korea-US situation could trigger similar recalibrations, with India poised to benefit.
In an effort to cushion the blow, the South Korean government has announced an additional liquidity injection of USD 1.43 billion, on top of an already promised USD 9.5 billion (13 trillion won) policy support package for the auto sector.
Furthermore, Seoul and Washington are expected to begin working-level discussions this week, aiming to reach a broader economic understanding by early July. These negotiations will be pivotal—not just for South Korea, but for the larger East Asian export ecosystem.
South Korea’s April export figures highlight just how fragile and interconnected the global automotive trade has become. For India, this is a moment of strategic significance. As Korean automakers reassess their global strategy, India must strengthen its positioning—not only as a key production base but as a global innovation and export hub, especially in the EV and hybrid space.
The coming months will determine whether India can capitalize on the shifting tides of global trade or simply observe from the sidelines. But one thing is clear: the auto industry’s center of gravity is shifting, and India must be ready to take the wheel.
