The automotive parts industry is facing a series of setbacks in exports, from U.S. tariffs to the Middle East conflict. Companies that were looking to Europe or the Middle East as alternatives to the U.S. market are particularly on high alert.
Domestic auto parts companies, which have been burdened with a 25% tariff on U.S. exports since early May, have been pursuing plans to diversify some of their North American export volume to other regions. However, with recent heightened tensions in the Middle East, including U.S. strikes on Iranian nuclear facilities, plans for exports to Europe or the Middle East may face disruptions.
The impact on companies preparing to enter the Middle East market is particularly significant. The CEO of Company A, a small and medium-sized enterprise manufacturing brake parts in Gyeonggi Province, said, “We had judged that it would not be easy to compete with local companies in the U.S. due to tariffs, so we were planning to develop new markets in Middle Eastern countries like Egypt starting this year.” He added, “However, with the sudden increase in Middle East risk, we have temporarily put our plans on hold and are monitoring the situation.”
There are also concerns that logistics costs for European exports could significantly increase. This is based on the prediction that if Iran blocks the Strait of Hormuz, ship operations will be disrupted and freight rates will inevitably rise. There are fears that the precedent of soaring maritime freight rates due to Houthi rebel attacks on merchant ships in the Red Sea last year could be repeated. An official from Company B, which produces lead-acid batteries, explained, “We are increasing our export volume to Europe in response to U.S. tariff policies, but if freight rates surge, we may have to expand new transactions to Southeast Asia.” A representative from auto parts Company C said, “We are also considering sending products by air to prepare for a scenario where the Strait of Hormuz is actually blocked.”
However, the industry unanimously agrees that Europe is a region where localization strategies should be strengthened from a long-term perspective. If the Trump administration’s tariff policies continue, Europe is the only place where exports of high-value-added parts for electric and hybrid vehicles can be expanded. According to the Korea Auto Industries Coop. Association and the Korea International Trade Association, Korea’s auto parts exports to Europe last year amounted to 3.89 billion dollars (approximately 5.3736 trillion won), ranking third after North America and Asia.
