Shares of South Korean carmakers Hyundai and Kia fell on Thursday after US President Donald Trump said the US will charge a 15% tariff on imports from South Korea, including cars, as part of a trade deal.
While the agreement reduces car tariffs from 25%, it removes the 2.5% advantage in tariffs that South Korean carmakers had enjoyed over Japanese rivals under the Korea-US free trade deal.
Some analysts said the share falls may have been driven by profit-taking as news of the tariffs was already factored in after South Korean carmaker shares surged last week after news that Trump agreed to reduce Japanese car imports to 15%, a move that stoked optimism about a similar deal for Seoul.
South Korea's auto association said the tariff cuts are “fortunate” and remove uncertainty and create a level playing ground with Japanese and European rivals.
Hyundai Motor said the deal “validates our unwavering confidence in the US market and our commitment to American manufacturing.”
Hyundai Motor Group in March announced a $21bn (R377.2bn) investment in the US with Trump at the White House, including a $5.8bn (R104bn) steel factory and an expansion of Hyundai Motor's new car factory in Georgia.
Before Washington imposed 25% car tariffs in April, there were zero tariffs on most South Korean car imports under a bilateral trade deal, while there was a 2.5% tariff on Japanese car imports.
South Korean negotiators demanded 12.5% car tariffs, but Trump wanted the rate to be 15%, the presidential office said.
Hyundai shares fell 4.5% and Kia stock lost 6.6%.
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