President Donald Trump’s tariff policies have unsettled the auto industry, but signs of selective tariff relief could provide much-needed support to automakers. Kia, in particular, is emerging as a key beneficiary.
On Thursday, Kia’s stock closed at 98,000 KRW (approximately $68), up 2.19% (2,100 KRW, approximately $1.45) from the previous day.
The increase followed reports that the Trump administration would exempt Mexican-made cars from tariffs, pushing Kia’s stock up by more than 2%.
On Wednesday, the Trump administration announced a one-month suspension of the 25% tariff on automobile imports from Mexico and Canada.
White House spokesperson Caroline Levitt announced that the administration will exempt tariffs on cars imported through the United States-Mexico-Canada Agreement (USMCA) for one month.
Following this announcement, auto and parts sector stocks rose on Wall Street. Major U.S. automakers recorded significant gains, with General Motors up 7.21%, Ford up 5.76%, and Stellantis up 9.24%.
Market analysts expect Kia, which operates a factory in Mexico, to be one of the biggest beneficiaries of the tariff exemption.
Kia began constructing its Monterrey plant in September 2014 and commenced mass production in May 2016. The facility has an annual production capacity of 300,000 vehicles and manufactured approximately 250,000 units last year.
Eugene Investment & Securities reported that Kia Mexico exported approximately 167,000 vehicles to the U.S. last year, accounting for 18% of Kia’s total U.S. sales.
Lee Jae Il, a research analyst at Eugene Investment & Securities, said that while Kia was expected to face challenges due to tariffs on Mexican-made vehicles, the exemption significantly reduces this policy risk.
Some experts predict that the entire automotive sector, not just Kia, could experience rising stock prices.
Removing these tariffs could relieve automakers, as previous tariff concerns had weighed on the industry’s valuation.
According to Meritz Securities, following Trump’s election in November, automotive-related stocks, including Hyundai (-9%) and Kia (-0.4%), underperformed compared to the KOSPI index (-2%).
Investors appear to be viewing the tariff exemption as a favorable development.
On Thursday, the domestic automotive sector index rose by 1.59%, while the automotive parts sector index increased by 1.36%.
Trump’s decision to suspend tariffs on Canadian and Mexican cars is linked to the unique structure of the U.S. auto industry.
Last year, Mexico exported 2.77 million cars to the U.S., making it the largest automobile exporter to the country. The “Big Three” U.S. automakers—General Motors, Ford, and Stellantis—accounted for 50% of these exports, with General Motors exporting 710,000 units, Ford 360,000 units, and Stellantis 310,000 units.
Beyond finished vehicle exports, the industry’s complex supply chains have positioned U.S. automakers as some of the biggest potential losers from tariff impositions.
Reports indicate that requests from major U.S. automakers influenced the decision to delay tariffs on automotive imports from Canada and Mexico.
According to Reuters, the CEOs of Ford, General Motors, and Stellantis spoke directly with Trump on Wednesday to discuss potential tariff relief for automobiles.
However, uncertainty over tariff policies remains since this is only a one-month exemption rather than a complete repeal. Some analysts suggest that South Korea could be included in next month’s upcoming U.S. auto tariff policy announcement.
Kim Joon Sung, a research analyst at Meritz Securities, stated that with both the potential imposition of tariffs on the Korean automotive industry and the possible reinstatement of tariffs on Mexican-made cars under consideration, the long-term impact on corporate valuations will become clearer once these policy details are finalized.
