Hankook Tire gains edge over Chinese rivals under Trump tariffs

CLARKSVILLE, Tennessee -- Early this month at the Hankook Tire plant in Clarksville, construction workers were installing the steel framework of its second factory. It is identical in size and appearance to the first plant completed at the site in 2017.

Hankook Tire & Technology Co., South Korea’s largest tire maker and one of the world's top 10 tire brands, will spend $1.6 billion on the new facility in Clarksville, about 70 km northwest of Nashville, the capital of Tennessee.

The launch of the new plant will double the company's US production to 12 million units by 2026 from 5.5 million units in 2024.

It is a timely investment in the US mainland given that its peers operating plants in Mexico and Canada will likely face a 25% tariff under the Donald Trump administration that kicks off on Jan. 20.  

ZC Rubber, China’s largest tire maker, is building a plant in northern Mexico for which it earmarked $500 million for construction.

China's Sailun Group, ranked 20th in the global tire market, completed a $240 million factory in Mexico in 2023 that produces 6 million tires annually.  

According to the US Tire Manufacturers Association, a total of 57 tire factories operate across the US. A majority of them are outdated, however, having been in operation for over 20 years.

Annual output at these plants averages 3 million units, one fourth that of Hankook Tire’s 12 million units once its second Tennessee factory is up and running in 2026.

Tires to be manufactured there will be delivered to nine carmakers, including Hyundai Motor Co., Kia Corp. and Toyota Motor Co., which operate plants in Alabama, Georgia and Kentucky, respectively. Tennessee borders all three states.

Starting in 2026, Hankook Tire will churn out 35 different product sizes. Its products currently come in 20 different sizes customized for six carmakers.

“Next year, the number of vehicle models equipped with Hankook tires will reach around 250, double the current number,” said Choi Intae, president of Hankook Tire America Corp.

The site of the production complex in Clarksville, Tennessee, spans an area of 1.89 million square meters, including the warehouse.

The new facility will be a smart factory, incorporating the same artificial intelligence-powered robotic arms and automated guided vehicles used in the first plant.

But Hankook Tire's aggressive US investment carries risks. The Trump administration’s universal tariffs on imports, pledged by his transition team, could lead to a price hike in raw materials such as natural rubber shipped to the US and result in longer tire replacement cycles.

Write to Jin-Won Kim at Jin1@hankyung.com
Yeonhee Kim edited this article.