Vehicles for export stacked at Pyeongtaek Port. Yonhap News. 

Anxiety is spreading within South Korea's automotive industry as the announcement of the 'Joint Fact Sheet,' detailing the results of the South Korea-U.S. customs and security negotiations, is delayed beyond expectations.

While details of the customs negotiations have been largely agreed upon, concerns are cautiously emerging that the effective date for the tariff reduction, which still leaves the industry burdened with a high 25% tariff, might be set unfavorably for South Korea.

According to industry sources on the 11th, South Korea and the U.S. were expected to release the Fact Sheet shortly after the summit between President Lee Jae-myung and President Donald Trump held in Gyeongju on the 29th of last month.

At the time, Presidential Chief of Staff Kim Yong-beom stated in a briefing immediately after the meeting, "The detailed agreement between the two countries is almost finalized," and added, "The Fact Sheet, combining tariffs and security, will take about two to three days."

However, nearly two weeks have passed since the summit without the Fact Sheet being released, and the domestic industry continues to be subject to the 25% tariff on automotive exports to the U.S.

The industry's fatigue is exacerbated by the fact that the tariff reduction for automobiles has not materialized for over three months since its initial agreement in July.

An official from a finished vehicle manufacturer stated, "There were high expectations as the government's efforts led to a favorable conclusion in the tariff negotiations," adding, "However, the delayed finalization is increasing the burden on the industry, so we are closely monitoring the situation."

For the domestic industry, which exports over 100,000 units to the U.S. monthly, the longer the tariff reduction is postponed, the more costs snowball.

South Korea exported 1,432,713 vehicles to the U.S. last year, and in the cumulative third quarter of this year, exports reached 1,004,354 units. Arithmetically, nearly 4,000 units are subject to high tariffs daily.

Hyundai Motor and Kia's tariff costs for the third quarter of this year were 1.8212 trillion won and 1.2340 trillion won, respectively. Consequently, Hyundai Motor's third-quarter operating profit decreased by 29.2% compared to last year, and Kia's decreased by 49.2%.

The industry is urging for a swift tariff reduction, emphasizing that even if the reduction is applied this month, it will take time to be reflected in performance after local sales, necessitating an immediate decrease in tariffs.

Kia's Head of Finance, Kim Seung-jun, stated during the third-quarter earnings conference call, "Even if it is applied retroactively to November 1st, the existing inventory has already paid the 25% tariff," and projected, "The tariff impact in the fourth quarter will not be significantly different from the third quarter, and its full effect will be seen next year."

Hyundai Motor and Kia Headquarters. Provided by Hyundai Motor Group. 

Concerns are also cautiously being raised that the effective date for the tariff reduction might be later than November 1st.

Minister of Trade, Industry and Energy Kim Jung-kwan stated at a Cabinet meeting on the 4th, "Regarding automotive tariffs, we will negotiate for them to take effect retroactively from the first day of the month in which the bill related to the U.S. investment fund is submitted."

If the procedures proceed as explained by Minister Kim, the date on which the U.S. government reduces the 25% tariff on Korean cars to 15% will be applied retroactively to the 1st of this month.

However, there are concerns that the U.S. side might insist on the signing of the Memorandum of Understanding (MOU) as the effective date for the tariff reduction.

Professor Kim Pil-soo of Daelim University commented, "For finished vehicle manufacturers, every day represents a significant loss, and it goes without saying for parts suppliers," adding, "While it may not be easy to set the tariff reduction date to August 7th, the date of reciprocal tariff imposition, November 1st must be secured."

Yonhap News