Hyundai Motor Warns Tariffs May Jeopardize U.S. Production

(Bloomberg) -- Hyundai Motor Co. warned it may rethink how many vehicles it builds in the U.S., joining the world's largest automakers in speaking out against U.S. President Donald Trump's crackdown on steel and aluminum imports.

“Changes to the existing tariff structure could negatively impact our current U.S. production and further expansion,” Jim Trainor, a Hyundai spokesman, said in an email. “Imposing tariffs on steel could increase production costs, which could lead to higher prices for U.S. consumers, and, potentially, decreased demand.”

Trump said March 1 that the U.S. plans to order tariffs of 25 percent on imported steel and 10 percent on aluminum, with a formal order to be signed next week. Hyundai's comments go a step further than Toyota Motor Corp. and Ford Motor Co., which have cautioned that the tariffs would make vehicles costlier while stopping short of saying the levies could impact production plans.

The South Korean automaker builds Hyundai Sonata and Elantra sedans and Santa Fe Sport crossovers at a plant in Alabama. Its affiliate Kia Motors Corp. assembles Sorento sport utility vehicles and Optima sedans in Georgia.

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Honda Motor Co. on Saturday called the administration's move “imprudent.”

The tariffs imposition would raise prices on both domestic and imported products, causing an unnecessary financial burden on its customers, Teruhiko Tatebe, a Honda spokesman, said by phone. The automaker sources its steel and aluminum extensively from U.S. suppliers, he said.

Toyota, which plans to build a new $1.6 billion factory in Alabama with Mazda Motor Corp., said the administration's decision will “adversely impact” auto companies by increasing costs and prices of cars and trucks sold in the U.S. That's even as more than 90 percent of the steel that Asia's largest carmaker needs in the U.S. is from the country.

Trade groups representing automakers including General Motors Co. and Toyota, plus parts suppliers like Robert Bosch GmbH, had tried to warn the Trump administration of unintended consequences before the president's announcement on the tariffs.

--With assistance from Ken McCallum and Rob Golum

To contact the reporter on this story: John Lippert in Chicago at jlippert@bloomberg.net.

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Lena Lee, John McCluskey

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