During the 1^st Trump administration (2017-2021), the EV manufacturing market was influenced by numerous polices which ultimately impacted the automotive market of South Korea and China as well (Kennedy, 2024). The biggest change from the initial Trump administration was rolling back the environmental regulations set in place from the previous Obama era. The previous regulatory burdens such as fuel efficiency standards or emissions targets were relieved, pushing consumers towards fossil fuel driven choices rather than cleaner alternatives (Laidley, 2024). With the intention of boosting the nation’s oil and gas production, the administration continued to eliminate the tax credits or incentives for EVs which lead to the machines lacking competitiveness with internal combustion engine vehicles (Friedman, 2024). Additionally, with an ‘America-First’ stance, its protectionist policy towards other nations by imposing tariffs on imported goods, highly impacted China and South Korea’s industries as well (United Nations, 2024). China being a major player in the global EV production chain, Trump’s tariffs greatly impacted Chinese battery production companies from exporting to the states. As many of the EV components were sourced from China, the tariff led to components such as batteries, electronics and raw materials to rise in production costs. These regulatory measures also disrupted the supply chains, as it became costlier to import components from China. Many firms considered relocation or ending business terms completely (Boudette, 2025). Ultimately, China’s tit-for-tat retaliatory response complicated the automotive market on both sides, escalating costs on both ends. South Korea’s EV battery manufacturers were affected by the US-China trade tensions, and the costs trickled down as a domino effect onto firms such as LG Chem and Samsung SDI. South Korea’s position to navigate the complexity of the trade tension ultimately led to South Korea aligning closely to US oriented trade policies. The Trump administration inadvertently left room for cooperation with allies in terms of technological partnerships and South Korean firms proactively took advantage (Kim and Park, 2025).

Before joining the WTO in 2001, China lagged behind regions such as South Africa and South America in the automotive manufacturing industry. However, after its WTO accession, China experienced significant growth by forming joint ventures with global automotive brands (Seo, 2022). Since the mid-2000s, as global interest in renewable energy surged, electric vehicles (EVs) began to establish a new paradigm in the automotive market. Amid these changes, China's automotive industry rapidly grew, securing technological and industrial competitiveness, and positioned itself as a global leader in the automotive market. There are two primary reasons why China has also become a global leader in the EV industry. The first is its dominant position in raw and processed battery materials. In advanced manufacturing for the Fourth Industrial Revolution, key strategic minerals include rare earth elements and rare metals. China holds 90% of the global supply of rare earth elements and rare metals (Kim and An, 2022), and it also commands 78% of the market share for processed battery materials (Stephen Ezell, 2024). The second factor is its domestic market. EV sales in China have surged since 2019, with 6.9 million EVs sold domestically in 2022. Consequently, the International Energy Agency (IEA) and Bloomberg New Energy Finance (BNEF) project that China will account for 40% of global EV sales by 2030 (J.L. Salaberria and L. Xia, 2023).

As Donald Trump takes office for the second time, China and South Korea’s automotive industries are presented with an uncertainty once again. With the experience from approximately five years ago, both countries how released official new reports as well as government documents presenting their approaches in preparation of the Trump’s inauguration. As two countries present a different industry stance, the paper aims to conduct a comparative analysis on China and South Korea’s strategic positioning in the EV market in response to the 2^nd Trump administration. This paper conducts a comparative analysis of the strategic positions of China and South Korea in the EV market, focusing on their respective responses to the second Trump administration. To compare the strategic positions of both countries, we utilized media sources from each nation. The strategies and policies discussed in this paper are derived from references to various sources, including national portal sites, reports, news articles, and academic papers.

During Trump’s campaign for the second term, the team has announced several policies that could greatly impact the EV market and automotive industries. As Trump’s inauguration initiated on January 20^th, 2025, there is a possibility that the mentioned regulations might be modified throughout the course of the administration.[1] However, there are consistent principals throughout his campaign which would be the main focus dealt within this paper.

SOUTH KOREA

The South Korea Automotive Research Institute (KARI), in its 2025 report on the current status and outlook of the domestic and global automotive industry, assessed that South Korea's heavy dependence on automobile exports makes it inevitable for exports to be impacted if President Trump imposes tariffs in the short term (Kim, 2024). The South Korean government has analyzed that Trump’s first and second administrations differ in terms of his influence within the Republican Party. It predicts that the reelected cabinet is likely to be composed of individuals with strong loyalty to Trump and a pragmatic, U.S.-centric mindset, cautioning against excessive optimism.

Despite not being included under the IRA provisions last year, Hyundai Motor sold over 120,000 EVs in the U.S., securing the second spot in the U.S. EV market (Kim, 2025). The Hyundai Motor Group has announced plans to overcome tariff barriers through local production and respond to changes in eco-friendly vehicle policies by producing hybrid vehicles. The company has emphasized a flexible approach to adapting to the new administration and expressed its intention to cooperate proactively. Below are the details found in the media regarding South Korea's EV automotive strategies in preparation for the inauguration of the second Trump administration (Osterberg, 2025).

Reduced EV Incentives

Trump has argued to roll back the existing EV mandates and federal tax credits for EVs. An estimation of $7,500 EV tax credit has been utilized to provide consumer affordability for EVs and stimulate the transition to a greener automotive selection (Wayland, 2024). Trump announced his plan to reduce or eliminate the tax credit and focus on fossil fuel production to boost the domestic economy. As a continuation of his first term, the policies ensure deregulation on fossil fuels, and easing regulations on emissions which can ultimately push automakers to swift towards producing gasoline automotive vehicles. Additionally, under the Inflation Reduction Act (IRA), the Trump administration has shown interest in tightening the Foreign Enemy of Concern (FEOC) restrictions (Rivera & Overly, 2025). The FEOC restrictions restricts eligibility for the $7,500 consumer tax credit of EVs if the components of the battery contain minerals that were extracted, processed or recycled from a foreign entity that is owned, controlled or subject to a specific foreign government (such as China). Currently the FEOC states that if the foreign entity is defined as ‘owned, controlled or subject to another entity’ when at least 25% of the organization’s board members, voting rights or equity interests are held by the other entity (Seo, 2025). When the 2^nd Trump administration decides to tighten the 25% threshold, this leads firms lacking possibility to gain tax incentives in the EV market.

Abolishing IRA and Increased Tariffs to Chinese Imports

With a consistent America-first policy, the reelected administration is expected to focus on increasing tariffs specifically on the imports from China. The expansion of Section 301 of the Trade Act of 1974, can raise the costs of EVs and its battery components, critical associated minerals, etc. (United States Trade Representative, 2024). Through the legal justification of the International Emergency Economic Powers Act (IEEPA), the expedited tariffs will lead to increased manufacturing costs of EVs and disrupt the existing supply chains. This action will be the consistent US’s attempt to decouple from China and diversify the supply changes within the domestic market (Lee, 2024).

Rising Uncertainty with Ties to Tesla

Although the Trump administration supports ending the EV mandate, Trump’s most influential supporter during the election cycle, Tesla CEO Elon Musk, remains an unpredictable factor in whether Trump will follow through with his promises once in office. Appointed as co-head of the Department of Government Efficiency (DOGE) under the second Trump administration, Musk has fueled the rollback of environmental policies, advocating for the elimination of EV tax credits through a "market monopoly" approach (Chappell, 2024).

The initial Trump campaign aimed to curb the proliferation of electric cars, intending instead to boost sales of leading domestic firms such as Ford, General Motors, and Stellantis. With emission standards expected to be adjusted, these three automakers will no longer need to invest heavily in electrifying their models and can instead focus on other priorities, such as affordability (Ford, 2024). This market environment could work to Tesla’s advantage, as the company relies less on carbon credits and has a longer history of exclusively producing EVs, operating even before government credits were introduced.

Furthermore, with the Trump administration blocking the entry of cheaper foreign EV manufacturers, such as BYD, into the U.S. market, Tesla could gain a comparative advantage, effectively dominating the EV segment domestically (Ewing, 2025).

On a broader scale, the incoming administration's significant appointments of business leaders to government positions increase the likelihood of a technocracy. Pro-growth and pro-business policies are expected to be pursued, with the market's influence on national policy decisions likely to expand (Madasamy, 2024). Compared to the Biden administration, the new administration is anticipated to take a more lenient stance on regulations related to big tech companies and is likely to adopt pro-business measures such as corporate tax cuts.

Furthermore, efforts to secure America’s technological and digital economic dominance indicate an expansion of big tech companies’ influence, with a new framework referred to as the “digital order” emerging. Therefore, while the administration may adopt a passive stance on environmental agendas, it is expected to take a positive approach toward embracing new technologies and pursuing innovation.

Current Production Expansion

The South Korean government announced plans to respond to the new U.S. administration by utilizing various strategies, including mergers and acquisitions of local companies and establishing joint ventures. The Ministry of Trade, Industry, and Energy also stated its intent to strengthen outreach regarding U.S. policies and support domestic "mother factory" investments worth 24 trillion KRW this year (Park, 2025). At the center of this strategy is the HMGMA facility in Georgia, USA. Originally established as an EV-exclusive plant, it is now expected to flexibly respond to market demand by producing both EVs and hybrids due to the rising demand for hybrid vehicles. The company has announced plans to increase annual production capacity from 300,000 units to 500,000 units and has upgraded its systems to enable mixed production starting in the second half of 2024 (Yoo, 2025).

LG Energy Solution is investing approximately 7.2 trillion KRW in its Arizona plant to build a next-generation cylindrical battery production line and is planning to establish a new EV battery factory (Jung, 2024). Similarly, SK On and Samsung SDI have begun operating joint plants in collaboration with Blue Oval SK (a joint venture with Ford) and Star Plus Energy (SPE).

When these production facilities are completed during Trump’s second term, they are expected to significantly contribute to job creation, alleviate U.S. reliance on the Chinese battery supply chain, and strengthen South Korea-U.S. battery cooperation (Jeon, 2024).

Flexible Responses & Building Key Partnerships in the U.S.

In 2024, hybrid models accounted for 56.1% of Hyundai Motor's total eco-friendly vehicle exports, demonstrating strong demand in the eco-friendly vehicle market (Kim, 2024). Consequently, Hyundai is simultaneously producing EVs, hybrids, and SUVs while striving to expand partnerships with major U.S. companies.

Currently, approximately 100 South Korean companies manufacture cars and auto parts for export to the U.S. from Mexico. These companies are preparing to pivot toward a "localization strategy" by increasing production and employment within the U.S. The Financial Times reported that in 2024, South Korea made the largest investments in the U.S. automotive market and created significant jobs (Chu, 2024). This reflects South Korea's active response to U.S. industrial policies by shifting supply chains and trade toward a U.S.-centric framework. However, the report also noted that the imposition of tariffs could hinder this momentum.

In response, the South Korean government plans to persuade the U.S. to exempt South Korean companies from tariffs, arguing that such measures would counteract U.S. geopolitical interests. Hyundai Motor Group has entered a strategic partnership with NVIDIA to enhance mobility solutions and expand the application of AI technologies across its operations (Hwang, 2024). Additionally, Hyundai has signed an MOU with GM on EVs and hydrogen vehicles, signaling collaborative efforts with major global automakers.

Hyundai also participated in donations for President Trump's inauguration, showcasing its proactive measures to protect domestic automotive supply chains and cooperate with the new administration.

Response to Strengthened Policies Excluding China

The new Trump administration is expected to reinforce policies aimed at excluding China, prompting South Korea to strengthen its own supply chains or establish supply chains led by South Korean companies. Particularly in the EV sector, where batteries are a critical component, the exclusion of China from supply chains could position South Korean companies as leaders, and they are showing a willingness to seize this opportunity. However, given the high dependence on Chinese components in South Korean automotive production, efforts to reduce this reliance must be prioritized (Park & Jung, 2024). As the containment of China intensifies, South Korea needs to explore ways to substitute Chinese components and integrate its companies into the supply chain.

There is also a growing likelihood of tariffs being imposed on Chinese-made components. If South Korean auto parts companies operating in China were to return to South Korea as a result, support measures for these companies would need to be strengthened.

At the same time, South Korea recognizes that its production of high-quality, mid- to high-priced EVs provides a competitive edge in the market. There is emerging discourse that the new U.S. administration should not be seen as a significant threat. While China focuses on flooding the market with low-cost EVs, South Korea can differentiate itself by targeting the premium market segment, turning this into an opportunity for growth (PBS, 2024).

Moreover, South Korea’s export structure is already diversified across markets such as China and ASEAN. With strategic responses, the government believes that policy changes could present opportunities, and this optimistic outlook is reflected in official statements.

Commitment to Automotive Trade and Diplomatic Efforts

Regarding the implementation of the IRA, the South Korean government has announced the need for diplomatic efforts to secure exemptions for certain provisions at each stage. South Korea plans to emphasize that the U.S. currently lacks sufficient battery manufacturing capabilities and that South Korea’s battery industry can provide solutions to address this weakness. The government is preparing to propose ways in which South Korea can become a strategic partner to the U.S. (Hyun, 2025).

Additionally, South Korean experts believe that the second Trump administration is likely to address immediate issues involving China and Mexico through general tariffs, making it less likely for individual FTAs, such as the Korea-U.S. FTA, to be repealed or renegotiated (Jung, 2025). However, with the Trump administration about to take office, experts highlight the importance of government-level responses. Amid increasing uncertainty due to domestic political conditions, many companies are expressing concerns about the situation.

CHINA

China's automotive manufacturing industry faced a challenging period with the election of U.S. President Donald Trump in 2017 and the ensuing U.S.-China trade war. President Trump criticized the interest rate disparity between the U.S. and China, advocating his "America First" principle, and imposed a 25% tariff on $50 billion worth of Chinese goods exported to the U.S. This included automobiles, leading to the Chinese automotive market experiencing its first-ever negative growth rate in 2018 (Chen, 2023).

Additionally, Chinese auto parts companies exposed to the U.S. market suffered significant losses in stock value. For example, Weichai Power Co., Ltd., a prominent Chinese company specializing in diesel engines and powertrain systems, experienced a decline in its stock price during the U.S.-China trade war, highlighting the negative impacts on the sector (Wang, 2020).

With Donald Trump’s reelection as the 47th President of the United States in 2024, there is growing attention on the potential impact of his policies on the Chinese market. During his campaign, Trump pledged to revoke China’s Most-Favored-Nation status and impose a 60% tariff on Chinese goods (George Magnus et al., 2024). However, unlike during the U.S.-China trade war of 2017-2018, China has adopted a comparatively conciliatory stance this time. Chinese Vice Premier Han Zheng stated that following Trump’s reelection, China would focus on cooperation with the U.S. government based on mutual benefits (Jett, 2025). Similarly, President Xi Jinping expressed a willingness to enhance dialogue and communication in accordance with the principle of win-win cooperation after Trump’s victory (Wong, 2024).

China’s conciliatory approach reflects its preparedness for Trump’s reelection. Chinese scholar Zhu Feng noted that the Chinese government had studied Trump’s political style and policies during his first term (Wong, 2024). Although Trump proposed imposing a 60% tariff on Chinese goods after his reelection, analysts believe that such a move would exacerbate inflation in the U.S., harm the domestic economy, and weaken Trump’s support base. Even if U.S. companies relocate factories to India or Southeast Asia to replace Chinese production, these regions lack the infrastructure and resources to match China’s capabilities, making full substitution impossible (Lee, 2024).

China’s automotive manufacturing sector is also closely monitoring Trump’s reelection. Chinese automakers currently use Mexico as a strategic base for entering the North American market. However, Trump’s proposed 60% tariff policy is expected to significantly hinder their access to the North American market. Such a policy would likely impact not only finished vehicles but also auto parts manufacturers.

Between January and August 2024, China exported 61,000 cars to the U.S., while the export value of auto parts reached nearly $12.1 billion (Auto Trend Media; 汽势传媒, 2024). If Trump’s 60% tariff policy is implemented, it is expected to significantly reduce the market share and profitability of Chinese auto parts manufacturers in North America. Below are the details found in the media regarding China's EV automotive strategies in preparation for the inauguration of the second Trump administration.

Targeting Emerging Markets

China views Trump’s reelection as an opportunity rather than a threat. Due to the relatively small volume of China’s EV exports, the impact of tariffs is expected to be minimal; however, the automotive parts industry is anticipated to face significant challenges, posing a potential risk. Nevertheless, it is believed that Trump’s policies could slow the development of the U.S. automotive and EV markets, thereby creating more opportunities for China to expand its presence in the global market (Waterdrop Auto; 水滴汽车, 2025).

The Biden administration had focused on policies to expand EV adoption, increase battery production, and strengthen supply chains, actively supporting the growth of the EV industry. In contrast, Trump opposes the widespread adoption of EVs, prioritizing the restoration of traditional manufacturing and a production-centered policy within the U.S. Notably, he has taken a hardline stance by declaring, “If it’s not made in America, it won’t be allowed to sell here,” pressuring foreign companies to establish factories within the U.S (Dahe Financial Cube; 大河财立方, 2024).

As a result, China assesses that Trump’s protectionism and the potential elimination of EV subsidies may slow the transition of the U.S. automotive industry, while providing a strategic opportunity for China’s EV and automotive parts industries to expand their dominance in the global market. As a result, China is actively targeting the European market. China’s BYD has officially begun operating an automobile factory in Hungary, while EVE Lithium Energy has established its first European plant in Hungary (Xinhua Net; 新华网, 2025).

Strengthening the Domestic Market

In 2024, China's domestic automotive market maintained steady growth, driven by intense price competition and a vehicle replacement program leveraging EV purchase subsidies. This environment favored key local players such as BYD, Geely, and Xiaomi, while accelerating industrial restructuring amidst fierce competition. NEV sales in China rose by 40.7% in 2024, accounting for 47.2% of the country's total automobile sales. It is anticipated that by 2025, EV sales in China will surpass those of internal combustion engine vehicles, a milestone reached years ahead of Western countries (Reuters, 2025). Beijing has announced that it will extend its vehicle trade-in subsidy program until 2025, a policy expected to further strengthen China's domestic market and play a crucial role in expanding the adoption of electric and eco-friendly vehicles.

Independent Supply Chain

China has established an independent supply chain to reduce external dependency, minimize geographical and political risks, and build "technological barriers" based on its competitive technological edge. According to a report by the Tokyo Yano Research Institute, Chinese companies hold global market shares of 89.4% for cathodes, 93.5% for anodes, 87.4% for separators, and 85% for electrolytes (Observer Network; 观察者网, 2024).

These figures demonstrate China's dominant position in the global battery supply chain and its unparalleled competitiveness in battery manufacturing and supply. Moreover, by leveraging technological advancements and cost efficiency, Chinese companies maintain a technological edge in the global market, strengthening the "Made in China" brand in the battery industry.

This strategy enables Chinese companies to expand into new markets such as Europe, Southeast Asia, and the Middle East, providing a foundation for playing a leading role in the global restructuring of industrial supply chains.

Targeting Low-Cost EVs

China is pursuing the globalization of affordable, high-value EVs. Chinese low-cost EVs are gaining popularity not only in China but also in various other countries. For instance, in Japan, the sales of EVs from China’s BYD have surpassed those of Japan’s own Toyota-branded EVs. In 2024, BYD’s EV sales in Japan totaled 2,223 units, compared to Toyota’s 2,038 units, demonstrating that affordable and high-value EVs are well-received both domestically and globally (Upstream News; 上游新闻, 2025).

DISCUSSION AND CONCLUSION

With the inauguration of the second Trump administration, the automotive industries of South Korea and China face both challenges and opportunities. While South Korea and China share similar strategies, they exhibit slightly different approaches.

Both countries aim to adopt a conciliatory attitude toward the U.S. in response to protectionist policies and high tariffs, seeking to strengthen diplomatic efforts. Additionally, both nations are implementing strategies to bolster their domestic automotive industries to ensure stability. South Korea is expanding the production of hybrids and electric vehicles, while China is extending EV purchase subsidies and vehicle trade-in support programs to further solidify its domestic market.

Moreover, both countries are striving to establish independent supply chains. South Korea is working to reduce its reliance on China and build a U.S.-centric supply chain, whereas China, already holding a dominant position in the mining and processing of raw materials like lithium and rare earth elements, is focused on securing its own supply chain.

However, the two countries adopt differentiated strategies in the global market. South Korea is targeting the premium segment with high-quality electric vehicles, while China is focusing on affordability and mass adoption by promoting low-cost EVs.

In conclusion, under the protectionist policies of the second Trump administration, the strategies of South Korea and China are results of their respective strengths and industrial environments. South Korea plans to enhance the quality of its electric vehicles through advanced technology and a stable production system, aiming to enter premium markets in developed regions such as the U.S. and Europe. Meanwhile, China seeks to solidify its supply chain by leveraging its vast domestic raw materials and market, achieving mass production, and maintaining competitiveness in the global market with affordable, high-value electric vehicles. Both South Korea and China are expected to play significant roles in the global EV market through their respective strategies, contributing to the growth of the global EV industry.

ACKNOWLEDGMENTS

This work is financially supported by Korea Ministry of Land, Infrastructure and Transport (MOLIT) as Innovative Talent Education Program for Smart City.