Hyundai Motor shares rally after US investment plan

Hyundai Motor’s shares gained ground after it unveiled a new U.S. investment plan to help avoid President Trump’s tariffs.

The South Korean automaker announced at the White House on Monday that it would invest an additional $21 billion in U.S.-based car manufacturing and supply chains for critical materials, including a $5.8 billion steel mill to be built in Louisiana.

Hyundai’s shares were last 4.5% higher after surging more than 7% earlier on Tuesday. Its sibling automaker Kia gained 2.0%, even as the benchmark Kospi shed 0.4%.

SK Securities analyst Yoon Hyuk-jin said in a note that Hyundai’s move could generate a positive effect, if not a tariff exemption, when U.S. tariffs are imposed on automobiles and car components.

“It is a decision to reduce overall costs by expanding investments rather than paying out tariffs,” Yoon said.

Trump at Monday’s announcement credited Hyundai’s investment pledge to his aggressive use of tariffs to discourage companies from relying on imports for their U.S. operations.

South Korea is at risk of losing its relief from a 25% U.S. tariff on imported steel. Trump in 2018 granted the country a duty-free quota on steel imports but his current administration has eliminated all exemptions and quotas in revisions to his tariffs.

Hyundai plans to build a steel mill south of Baton Rouge, La., with a production capacity of 2.7 million tons a year, by 2029, creating 1,300 jobs. =

The company plans to supply steel for vehicles made at its plants in Alabama and Georgia, where it intends to construct a third auto assembly plant in the U.S.

Write to Kwanwoo Jun at Kwanwoo.Jun@wsj.com