A sudden change in tariffs is set to shake up the hybrid car market in the United States. Starting Tuesday, the tariff on Japanese automobiles entering the US will fall from 27.5 percent to 15 percent. At the same time, South Korean-made vehicles will continue to face a steep 25 percent tariff because negotiations between Washington and Seoul have not moved forward.
This shift could create a strange situation in the market. Japanese cars, which were once seen as more expensive, may suddenly become cheaper than their Korean competitors. For example, the Toyota RAV4 Hybrid sells for around USD 32,850, while the Kia Sportage Hybrid is priced at USD 30,290. But if the full tariff rates are applied, the Sportage would rise to USD 37,863, making it more expensive than the RAV4 at USD 37,778.
This simple price flip shows how tariffs, not just production costs or technology, can change the buying decision for customers. What looks affordable today could be the pricier option tomorrow.
Hyundai Faces a Major Setback in the US Market
For Hyundai Motor and Kia, the timing could not be worse. Both companies have seen strong growth in hybrid sales in the US over the past four years. In 2021, they sold 90,614 hybrid units. That number grew to 124,191 in 2022, 183,541 in 2023, and 222,486 in 2024. From January to August of 2025, sales have already jumped 47.9 percent year-on-year to 198,807 units.
Tariffs on Japanese autos cut to 15% under new Trump executive order
But despite the growing demand, most of Hyundai Motor Group’s hybrid electric vehicles (HEVs) are produced in South Korea and exported to the United States. This means they cannot escape the 25 percent tariff barrier. Even though Hyundai is building a dedicated HEV production line at its new Hyundai Motor Group Metaplant America (HMGMA) in Georgia, the earliest that facility can be ready is sometime next year. Until then, the company has no choice but to absorb costs or pass them on to customers.
Industry experts believe that keeping prices low under these conditions will hit Hyundai’s profitability hard. The company is now caught between two tough choices—either raise prices and risk losing customers or hold down prices and lose profits.
Adding to the strain, Hyundai’s operations are also facing disruptions in battery supply. A US immigration raid at a battery plant in Georgia, jointly owned by Hyundai Motor and LG Energy Solution, has created uncertainty over whether production can keep up with demand. For a company already pressured by tariffs, such problems further complicate its ability to stay competitive.
India joins Malabar naval drill with US Japan and Australia in Guam as tariff issues continue
The bigger picture of the US hybrid car market shows just how competitive things already are. Between January and August of 2025, Toyota held a massive 51.1 percent share of the US hybrid market. Honda followed with 17 percent. Together, the two Japanese brands controlled more than two-thirds of all hybrid sales in the country.
Hyundai and Kia ranked third with a combined share of 12.3 percent, according to Wards Intelligence. While that number is smaller, it represents steady growth over recent years. The Korean brands have been gradually building a reputation for stylish designs and advanced hybrid technology.
However, the tariff imbalance could slow down their progress. If Japanese cars become cheaper overnight, buyers may shift even more toward Toyota and Honda. That would widen the gap in market share and make it harder for Hyundai and Kia to hold their ground.
For now, the numbers paint a clear picture: Japanese hybrids are set to become more affordable in the American market, while Korean hybrids could face higher price tags due to tariffs. The result may be a sudden change in customer choices at dealerships across the country.