Hyundai Hit with $1.3 Billion in Tariffs in Q3, Facing Headwinds

Hyundai Motor revealed that U.S. tariffs cost the company around $1.3 billion in the third quarter alone. But there's some relief on the horizon - a new trade deal between South Korea and the U.S. will cut tariffs on Korean car imports from 25% to 15%, though it comes with strings attached.

The agreement is part of a broader deal that requires South Korea to invest $350 billion in the United States. For Hyundai and other Korean automakers, these tariffs hit hard because most of their shipments previously entered the U.S. duty-free.

Hyundai found itself caught in the middle of escalating trade tensions. The company faced months of difficult negotiations and an unprecedented immigration raid at its Hyundai-LG Energy Solution battery facility in Georgia, which strained political relations even further.

The financial impact shows up clearly in Hyundai's latest results. Operating profits dropped 29% in the third quarter compared to last year, falling to $1.85 billion. That matched what analysts expected, but it still stings.

Here's what's interesting though - revenue actually climbed 8.8% to a record $34 billion for the quarter. The company delivered just over one million vehicles, up 2.6% from the previous year. North American sales jumped 13%, while electric and hybrid vehicle sales in Europe surged 42%.

Hyundai is betting big on U.S. manufacturing to sidestep future tariff headaches. Last month, the company lowered its 2025 profit outlook but raised revenue expectations as it pours more money into American operations.

The company also got help from favorable currency exchange rates, which boosted earnings. Retail sales rose 4.8%, nearly matching wholesale delivery numbers.

Looking ahead, Hyundai is pushing into hydrogen technology. The company just started construction on a new hydrogen fuel cell plant in South Korea. The $680 million facility will produce 30,000 fuel cell units annually for vehicles, ships, and construction equipment when it's completed in 2027.

For investors, the numbers tell a mixed story. Revenue growth shows demand remains strong, but profit margins are getting squeezed by tariffs and increased investment costs. The tariff reduction should help, but Hyundai will need to prove its U.S. manufacturing strategy can restore profitability while meeting the hefty investment commitments Seoul made to secure the trade deal.