Just got $7 billion to rescue GM South Korea or it will be "destroyed" by Trump vehicle import tariff plan

According to foreign media reports, not long ago, GM had just provided a $7 billion bailout for its loss-making South Korean branch and is now facing a new threat because the higher vehicle import tariff proposed by US President Trump will be South Korea has caused "destructive" effects.

Last month, the South Korean branch of General Motors reached a wage agreement with the union to avoid the application for bankruptcy protection. Earlier this month, General Motors and the South Korean government reached a bailout plan to reverse the continuous loss of GM Korea; in exchange, GM promised to operate in South Korea for at least 10 years, according to the agreement, for GM’s overseas operations, the company It will source more parts from Korean suppliers and produce two new models that are popular in the US market in South Korea.

But less than two weeks later, the Trump administration launched a national security survey on the import of automobiles and parts, which may lead to an increase in U.S. car import tariffs, similar to the tariff imposed on imports of steel and aluminum in March.

General Motors Korea is General Motors' largest production base in Asia (excluding China). Last year, GM South Korea exported approximately one-fourth of its production capacity to the United States, and the proportion will increase further, because with the fall in European sales, the company has switched to the production of popular American models. The anonymous source revealed that “the success of the GM Korea reorganization plan depends on more products for export, as well as the production of two new models that are mainly aimed at the US market in Korea to reach the target.”

Higher tariffs are painful for Asian car companies. Last year, Asian car makers exported vehicles to the U.S. that accounted for one-third of U.S. vehicle imports, such as Toyota and Hyundai. Higher tariffs may also have a devastating effect on smaller car companies such as GM Korea and their plans to become major export centers. A person familiar with the situation told Reuters: "This is an issue that will or will destroy GM Korea."

Ko Tae-bong, an analyst with HI Investment & Securities, said, “The increase in tariffs is not justified. The South Korean government injected all funds into GM. After GM exited the European market, no other major market can sell its vehicles except the US market. GM Korea has not commented on this yet.