The President of the USA — Donald Trump — and his administration is hell bent on imposing high tariffs on imports from other countries. This has forced many manufacturers across industries to rethink their future strategies. Trump’s strong “America First” measures has led to several major developments in the global auto industry.
As per recent reports, Hyundai Motor Group is set to invest $21 billion in the USA, the Korean carmaker announced the same on Monday in the White House, Washington. The announcement was made in the presence of President Donald Trump and Hyundai Chairman Euisun Chung and Louisiana Gov. Jeff Landry.
This $21 billion (INR 1.8 trillion) investment includes a $5.8 billion (approx INR 500 billion) steel plant slated with an annual production capacity of 2.7 million tonnes, for construction in the state of Louisiana. Hyundai’s move is viewed as an attempt to protect itself from U.S. tariffs on steel and automobiles.
Hyundai steel for EVs
However, it remains uncertain whether this strategy will secure exemptions for both Hyundai and South Korea. President Trump has warned of imposing reciprocal tariffs on multiple nations starting April 2, with South Korea potentially being a target due to its significant trade surplus with the United States.The facility is expected to employ over 1,400 workers and will manufacture next-generation steel for use in Hyundai’s two U.S. auto plants to produce electric vehicles.
This announcement has had a positive impact on the South Korean stock market, with Hyundai and Kia shares closing at 3.3 percent and 2.1 percent higher, respectively. However, analysts have raised concerns about how Hyundai Steel, burdened with billions of dollars in debt, will finance the factory’s construction. They also pointed out potential execution risks tied to the new technology of using electric furnaces for automotive steel production.
Hyundai Steel said it will cover half the costs, with the remainder invested by its parent company and other investors. The factory, which will make automotive steel, will be constructed from 2026 to 2029, the company said.
With inputs from Reuters