The Donald Trump administration has lowered the tariff rate on European automobiles and auto parts to 15 percent, following the same move for Japanese vehicles. 

While major global automakers are all subject to the 15 percent rate, South Korean-made cars such as Hyundai Motor will continue to face a 25 percent tariff in competing in the U.S. market for the time being.

Bloomberg and Reuters reported on Sept. 24 (local time) that the United States had finalized its decision to cut tariffs on European cars and parts from the existing 27.5 percent to 15 percent. The new rate is retroactive to Aug. 1. The U.S. Department of Commerce and the Office of the U.S. Trade Representative released documents the same day related to implementation of the trade agreement with the European Union (EU), which also included exemptions for certain pharmaceutical ingredients and aircraft components.

The 15 percent tariff on European cars is conditional on the EU first introducing legislation to eliminate tariffs on U.S. industrial goods and to grant preferential market access for certain U.S. agricultural and seafood products. The EU completed this preliminary step by releasing a draft bill on Aug. 28.

Until earlier this year, Hyundai Motor Group had been in a favorable position compared to Japan and the EU, which, under free trade agreements (FTA), received duty-free treatment and were subject only to the basic 2.5 percent tariff. Afterward, as President Trump nullified the FTA and entered into a tariff war starting in April, Hyundai Motor and Kia (000270) suddenly found themselves in a disadvantageous position in the U.S. market.

Previously, on July 30, South Korea had agreed with the U.S. to reduce tariffs on automobiles from 25 percent to 15 percent, along with reciprocal tariffs. However, follow-up negotiations to finalize the details have stalled. This was because the Trump administration demanded terms widely seen as excessive, including massive cash investments in U.S. dollars and 90 percent of profits being returned to the U.S. after fund recovery.

Source: Business Korea

• USTR Makes Findings and Proposes Action in 60 Section 301 Investigations Relating to Failures to Take Action on Trade in Forced Labor Goods
• [VCCI] The US officially initiates a Section 301 Investigation into Vietnam on Intellectual property
• General Secretary and President To Lam's working visit to three ASEAN countries: Demonstrating the stature of proactive and constructive diplomacy.
• Viet Nam accelerates innovation drive as skilled workforce becomes key to science and technology growth
• The US is increasing controls on AI chip exports