Hyundai's $21 billion bet on America: A tariff triumph?
The South Korean conglomerate Hyundai has announced a record investment of $21 billion in the United States. A key aspect of this investment is the construction of a steel plant in Louisiana for $5.8 billion, which will employ over 1,400 workers. "This investment is a clear demonstration that tariffs very strongly work," stated former President Trump.
On Monday, Hyundai unveiled an unprecedented investment in the American economy. The company plans to invest approximately $21 billion as part of a strategy to relocate production to the USA. Central to the project is the construction of a steel plant in Louisiana, valued at $5.8 billion, which will provide jobs for more than 1,400 people. This plant will produce next-generation steel intended for use in two of Hyundai's American automotive facilities dedicated to electric vehicle production.
The investment announcement was made at the White House, attended by President Donald Trump, Hyundai Chairman Euisun Chung, and Louisiana Governor Jeff Landry. During the event, Chairman Chung highlighted that this is the largest American investment in the company's history. He noted that the decision to open the plant in the Savannah region of Georgia "was initiated during my meeting with President Trump in Seoul in 2019," adding that "the project coincides with the start of President Trump's second term, making this moment even more special."
President Donald Trump views the investment, despite its origins in 2019, as evidence of the effectiveness of his then-current policy.
— This investment is a clear demonstration that tariffs very strongly work, — stated the American president.
Investments as a way to avoid tariffs?
Hyundai's decision comes at a time when international corporations are striving to avoid tariffs and potential trade wars ahead of the deadline for imposing new tariffs by the Trump administration, set for April 2. Taiwan Semiconductor Manufacturing Co. and Japan's SoftBank are other foreign companies that have recently engaged with the White House to announce significant plans to relocate production to the USA.
Hyundai Motor CEO José Muñoz recently stated in an interview with Axios that "the best way for us to navigate tariffs is to increase localization." The South Korean company is one of the leading sellers of electric vehicles in the United States, directly competing with Tesla. It already has two large car factories in the USA, one in Alabama and another in Georgia. On Monday, Hyundai also announced the opening of a third car factory, also in Georgia.
During the investment announcement, President Trump stated that "this investment is a clear demonstration that tariffs very strongly work." Previously, Trump had introduced a 25-per cent tariff on the import of steel and aluminium, as well as import duties on cars from Asia and Europe, which are set to take effect next month. The goal is to increase car production in the United States.
The battle for a market worth billions
South Korea is among the countries with which the USA has a trade deficit. In early March, Trump singled out South Korea for imposing high tariffs on American exports, claiming that the Asian ally's tariffs are four times higher than those imposed by the United States. Seoul challenged this imbalance, asserting that the effective tariff rate on imports from the USA will be 0.79 percent from 2024, due to a free trade agreement between the two countries.
Hyundai's announcement aligns with a broader trend of increased foreign investment in the USA ahead of the April 2 deadline, when even more stringent tariffs may be introduced against countries with large trade surpluses, such as South Korea. Trump encourages investment in America's manufacturing industry, and similar announcements have recently been made by Taiwan Semiconductor Manufacturing Company and Japan's SoftBank.
According to S&P Global Mobility data, 10.2 million cars were produced in American assembly plants last year, compared to 4 million in Mexican plants and 1.3 million in Canadian plants. Currently, about a million workers are employed in American factories producing cars, trucks, and automobile parts. Hyundai's new investment could substantially influence the future development of the automotive sector in the United States.
