Although US President Donald Trump recently walked back parts of his automotive tariff policies, Hyundai Motor Company and Kia are anticipated to experience only insignificant benefits, sources said Friday.

“The partial tariff exemption eases the tax burden for Hyundai Motor and Kia, lowering some of the price hike pressures due to rising costs,” said an industry source close to the matter on condition of anonymity. “However, this could benefit the carmakers only to some extent, as the 25 percent levies on automobiles remain in effect.”

On Tuesday, Trump signed an executive order to offer partial reimbursements for the next two years on 25 percent of auto parts tariffs set to start on May 3.

Vehicles assembled in the US will be eligible for offset credits equal to 3.75 percent of the price of a US-made car if it is manufactured before May 1, 2026. This means if a car is priced at $100,000, the credit would be $3,750. After that, the cap on these credits will decrease to 2.5 percent of the car’s value.

The order also stipulates that the auto parts tariffs will also not stack on the 25 percent levy on steel and aluminum products, suggesting that steel-based car components will be subject to a 25 percent tariff, rather than being imposed with a combined levy of steel and parts.

The Korea International Trade Association reported that 23 items targeted by auto parts tariffs overlap with the steel and aluminum tariff category, which had raised concerns over a combined tariff rate of up to 50 percent.

While Hyundai Motor Group declined to comment on the matter, citing confidentiality, experts say the impact of the softened tariffs would not significantly mitigate the company’s cost burdens.

“Trump’s reversal on auto parts tariffs was to address complaints by the Big 3 – General Motors, Ford Motor Company and Stellantis -- in the first place,” said Kim Pil-su, a car engineering professor at Daelim University. “The US government also finalized the 25 percent auto parts tariff exemption on Mexico and Canada, where these US auto giants heavily rely on parts sourcing compared to Hyundai and Kia.”

The new trade measures give US car manufacturers a competitive edge against foreign automakers who still face higher vehicle import costs, Kim added.

“Beyond the auto tariffs, Hyundai and Kia will need to relocate their entire car parts supply chain to the US. While they typically bring first-tier suppliers with them, supporting second- and third-tier partners producing smaller items, such as bolts and nuts, which are subject to 25 percent tariffs on the aluminum and steel products. The automakers will likely source these materials from local companies, which would be far more expensive.”

Hyundai Mobis, Hyundai Motor Group’s car parts subsidiary, which largely produces chassis module, battery system and power electric system, in the US is also working with Korean partners or localizing smaller parts sourcing.

Meanwhile, the Korean auto giant achieved a seven-month streak of record-high sales in the US market, despite facing challenges from the 25 percent auto tariffs.

In April, Hyundai Motor and Kia sold 74,805 and 87,810 units in the US, up 13.8 percent and 18.5 percent from the previous year, respectively. This was primarily due to the companies’ aggressive sales strategy to sell off inventories to prevent price hikes until June 2, sources said.

By Byun Hye-jin (hyejin2@heraldcorp.com)