A Move to Tide over U.S. Trade Protectionism
Hyundai Mobis recently moved a production line at its factory in Tianjin, China, to Korea. The line produces parts for electronic devices for exporting to the United States. The move was made based on a strategic decision to avoid the U.S. government's high tariffs on products manufactured at factories in China. The U.S.-China trade war that began last year has raised the U.S. government's tariffs.
Hyundai Mobis had been manufacturing electric parts at its factory in Jincheon, Korea, for exporting to the United States since the end of last year, said sources in the auto parts industry on March 7. Before the end of last year, the company produced them at its factory in Tianjin, China. Instead, Hyundai Mobis moved a production line for electronic parts for the European market at the factory in Jincehon, Korea to the factory in Tianjin, China.
This means that Hyundai Mobis changed the Tianjin factory in China-the U.S. line with the Tianjin factory in China-Europe line and at the same time, replaced the Jincheon factory in Korea-Europe line with the Jincheon factory in Korea-the U.S. line. Last year, the United States imposed a 25 percent tariff on products made in China. The imposition of the high tax prompted Hyundai Mobis to make up its mind to make a change in its production-export lines.
"As a high U.S. tariff was slapped on parts that were manufactured in our factory in China and exported to the U.S., we changed our production-export lines for products to be exported to the United States and Europe in consideration of price competitiveness," a Hyundai Mobis official said.
The Jincheon factory in Korea and the Tianjin factory in China are considered Hyundai Mobis’s major facilities for electronic parts production and supply. In particular, parts produced at the Tianjin factory had been delivered not only to Hyundai Motor’s and Kia Motors' factories in China but to their production bases in the United States.
As the Hyundai Motor Group is revising its production and logistics strategy in line with U.S. trade protection policies, auto industry experts say that it will be inevitable for Korean automakers to further revise their strategies, depending on the application of Section 232 of the U.S. Trade Expansion Act by U.S. President Donald Trump"