U.S., South Korea Reach Trade Deal; No Korean-built Hyundai Pickups in America's Future

Steph Willems
by Steph Willems

The United States and South Korea reached a free trade agreement on Monday that spared the Asian country from punitive steel tariffs, assuming Seoul keeps an eye on just how much steel it sends to American buyers.

A quota on Korean steel exports means the country can only sell 70 percent of its recent average (2015-2017) to the U.S., though it is hardly Korea’s largest export market. The deal, reached “in principle” ahead of both countries’ meetings with North Korean leader Kim Jung UN, will also see South Korea raise the limit for U.S.-made vehicles that needn’t conform to local safety standards from 25,000 to 50,000.

It’s good news for the Trump administration, but not everyone’s thrilled. Hyundai’s union is hopping mad that a steep tariff on Korean-built pickups — which was set to expire in 2021 under the previous agreement — was just renewed for another 20 years.

Calling it “humiliating,” the labor group said it had placed its future hopes on hitting it big in the U.S. pickup market. Now, workers in the country find themselves shut out of what their union calls “the future bread and butter of the South Korean auto industry.” The 25 percent chicken tax on light trucks shipped from Korea will continue until 2041.

“The union has called for domestic production of pickup trucks for the past several years,” the union said in a statement.

Nothing’s stopping Hyundai from building a pickup on U.S. soil, but it won’t help the automaker’s embattled (and quite militant) labor force. Already, falling worldwide sales has both workers and union brass on edge, even as the company hastily adopts a crossover-heavy product strategy. Strikes over wages have become commonplace.

From their vantage point across the Pacific, it wouldn’t be hard to see U.S.-bound pickup trucks as a one-way ticket to wealth and prosperity. Obviously, those Yanks can’t get enough of them. From this side of the ocean, however, we’re wondering when Hyundai will finally show us a product it intends to sell. The unibody Santa Cruz sport truck appeared in Detroit over three years ago, and we’ve since grown tired of Hyundai’s repeated promises that the model will indeed reach production.

Former Hyundai Motor America CEO confirmed the Santa Cruz’s green-lighting in mid-2016, but said the company wasn’t ready to announce it just yet. A year later, Michael J. O’Brien, vice president of corporate and product planning for HMA, again confirmed the model’s future production. As of early 2018, the model remains on Hyundai’s to-do list, but doesn’t carry a firm arrival date. Going on the company’s most recent product plan, the earliest we would see it is in 2020.

Already, the company’s Alabama facilities builds the Sonata, Elantra, and Santa Fe, but word broke late last year that Hyundai is considering Kona, Tucson, and pickup production in the U.S.

As for those Korean workers, they might still get a chance to build a pickup truck for a foreign country — just not the United States. Hyundai Australia is apparently quite interested in a truck, and a brawnier one than the Santa Cruz.

[Sources: Reuters, Bloomberg] [Images: Hyundai]

Steph Willems
Steph Willems

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  • NN NN on Mar 28, 2018

    The South Korean union is probably the achilles heel for Hyundai. They are keeping Hyundai from being able to move production to where it makes the most business sense, by requiring Hyundai to basically never cut employment without paying heavily for doing so. Yes, Hyundai does have a plant in the US, but what would be better for them is a plant in Mexico. That avoids chicken tax and allows them to produce for global markets (Mexico has free trade with many countries U.S. doesn't, including Brazil where this truck would also sell) at low cost (cheaper labor than China). My guess here is that the S. Korean labor unions won't allow Hyundai to find another "low cost" production base, preferring to export as much as possible from Korea.

  • Freddie Freddie on Mar 28, 2018

    Is there any tariff or quota on US cars that DO meet South Korean safety standards? How onerous are those standards? Don't Korean vehicles sold in the US have to meet US standards?

    • Big Al from Oz Big Al from Oz on Mar 28, 2018

      Freddie, This I find amazing. The US will not accept UN regulated vehicles, but we must accept US vehicles. This is the law preventing the US from getting alot of the globals. Add this to the Chicken Tax and its quite a huge barrier. Fair trade? Not.

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