Al Root

The U.S. has a trade deal with South Korea. The company breathing a sigh of relief on the news is General Motors.

It operates several facilities in the country, including two assembly plants.

GM stock was up 0.8% in premarket trading at $52.55, while S&P 500 and Dow Jones Industrial Average futures were rising 0.9% and 0.4%, respectively.

"I am pleased to announce that the United States of America has agreed to a Full and Complete Trade Deal with the Republic of Korea," wrote President Donald Trump on Truth Social Wednesday evening. "We have agreed to a Tariff for South Korea of 15%. America will not be charged a Tariff." The deal also includes South Korean investment in the U.S. and the purchase of U.S. energy products.

It's good news for General Motors, which imports cars from its plants in South Korea. Before the deal, the country faced 25% sectoral tariffs on imported cars.

"GM appreciates that negotiators have reached an agreement on trade between the US and South Korea," the company told Barron's in an emailed statement. "GM's long-standing operations in Korea produce high-quality crossovers that complement our U.S. vehicles, strengthening GM's global competitiveness and benefitting American customers and our U.S. operations."

In 2024, GM imported roughly 45% of the cars it sold domestically, mainly from Mexico and South Korea. That ratio is changing. In June, GM announced $4 billion in U.S. investments that will ultimately shift some production back in to the U.S. GM's Spring Hill Manufacturing in Tennessee, for instance, will add the Chevy Blazer in 2027. Today, the Blazer is assembled in Mexico.

GM estimated a 2025 tariff impact of about $4.5 billion, before any efforts by the company to offset rising costs. That number will likely be lower with the new deal. Investors now await news on tariff rates with Canada and Mexico.

The South Korean trade deal comes just after Ford Motor reported second-quarter earnings that included some $800 million in increased tariff-related costs. Ford management raised their estimate for 2025 tariff impacts to about $2 billion from $1.5 billion. Ford CFO Sherry House pointed out that increased tariffs on steel and aluminum, which raised prices for domestic materials, were partly to blame for the increase.

Ford management also said that 15% tariff rates, which are part of trade deals with Japan, the EU, and South Korea, don't create a significant incentive to move manufacturing back to the U.S.

Even at a lower 15% rate, however, the tariffs represent an opportunity for Ford, said CEO Jim Farley on Ford's second-quarter earnings conference call on Wednesday evening. "Yes, it may be less than 25%. But I think we found with administration, they're really committed to companies like Ford, and they are going to work hard to reduce that liability," added Farley.

Coming into Thursday trading, Ford stock was up about 3% since the Nov. 5 election. GM stock was down about 3%. GM stock was down about 2% since the trade deal was announced with Japan about a week ago. Ford stock was down 4% over the same span.

Write to Al Root at allen.root@dowjones.com

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July 31, 2025 05:06 ET (09:06 GMT)

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