Hyundai knew how to close the deal with Trump to avoid tariffs
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Hyundai Motor Group has found success in the United States by giving car buyers exactly what they want: desirable features packaged in a good deal.
- The Korean automaker displayed the same salesmanship in its dealings this week with President Trump.
Why it matters: Hyundai's headline-grabbing announcement of a $21 billion U.S. investment — most of which was already underway — was all Trump needed to show that his global tariff threats were working.
- In return, the president told Chairman Euisun Chung, now "Hyundai won't have to pay any tariffs."
- Everybody walked away satisfied.
The big picture: In the next four years, the parent of Hyundai, Kia and Genesis will more than double the level of investment it made in the U.S. over the past four decades.
That's a serious ramp-up in spending and includes:
- $9 billion to expand U.S. automobile production to 1.2 million units annually.
- $6 billion to expand U.S. supply chains for steel and auto components, including battery packs for electric vehicles.
- $6 billion for technology innovations, including autonomous vehicles, robotics, artificial intelligence and electric air taxis.
- The investments are expected to create more than 14,000 new jobs, and as many as 100,000 jobs in related industries, Hyundai said.
Between the lines: Those are big numbers and demonstrate the Korean automaker's commitment to the U.S., where Hyundai and Kia are quietly taking over American driveways.
Yes, but: Most of those projects were already in the pipeline before Trump started dangling the threat of tariffs — indeed before he even took office for a second term.
- The bulk of the $9 billion production expansion, for example, was already accounted for by Hyundai's new $7.6 billion factory in Georgia, which started building cars last fall.
- It takes Hyundai's U.S. capacity to 1 million vehicles, leaving actual growth over the next four years of just 200,000 vehicles.
- Hyundai's astute move was repackaging these projects to leave the impression they were all fresh commitments.
- Even the $5.8 billion steel plant announced Monday at the White House had been in the works for a year.
One example: Chung told White House reporters Monday that the idea for a new U.S. factory was "initiated" during a meeting with Trump in Seoul in 2019, a year after Trump renegotiated a bilateral trade deal with South Korea.
- When the two men met again at the World Economic Forum in Davos in January 2020, Chung said he mentioned the new plant to Trump.
Reality check: It was May 2022, more than two years later, when Hyundai actually made the announcement.
- And it was President Biden's hand — not Trump's — that Chung shook in Seoul as he unveiled a $10 billion U.S. investment plan that included Hyundai's first dedicated electric vehicle plant near Savannah, Georgia.
- The announcement came a few months before Congress passed the Inflation Reduction Act, which includes lucrative production tax credits worth billions of dollars to EV and battery manufacturers.
- But Biden's EV-friendly policies were well under way by then, and the entire industry was scrambling to abide.
The intrigue: On Monday, neither Trump nor Chung made mention of those Biden-era incentives, which remain in place (at least for now) and could be worth more than a billion dollars a year to Hyundai.
- Instead, Chung made a point of closing the loop with Trump by noting that this week's Georgia grand opening event coincides with the start of Trump's second term, "making this moment even more special," while Trump nodded and smiled nearby.
The bottom line: Hyundai offered a master class in how companies can manage the Trump presidency.
