Hyundai Motor Group is exploring the construction of its first overseas steel mill in New Orleans, Louisiana, with the project potentially breaking ground in 2026 and completed by 2029, according to industry sources. The move aims to mitigate the impact of protectionist policies from former President Donald Trump’s second term.

Hyundai, which includes Hyundai Steel Co. and Kia Corp., has allocated around 10 trillion won ($7 billion) for the plant as part of its broader strategy to support the growth of its electric vehicle assembly lines in Georgia. While Texas, Georgia, and Louisiana were all considered, the company is now focusing on New Orleans for its first offshore steel mill.

A Hyundai Steel official confirmed the review of the US plant but added, “We’ve been considering investing in the US. But nothing has been determined in that regard.”

If the project goes ahead, the facility will produce steel sheets for Hyundai's Alabama and Kia’s Georgia plants, as well as its electric vehicle production site, HMGMA, which can manufacture 300,000-500,000 units annually. Hyundai’s Alabama plant has a capacity of 330,000 units, while Kia’s Georgia facility can produce 350,000 units annually.

The US steel mill will likely have an annual production capacity of several million tons of steel sheets. Hyundai Steel’s total output in 2024 was 18.69 million tons, including 5 million tons of automotive steel plates.

The new plant will probably use direct reduction technology, which emits less carbon than traditional blast furnace methods, making it more environmentally friendly and increasing the likelihood of receiving approval from Washington for steel production in the US.

South Korean steelmakers, including Hyundai, face challenges such as high tariffs, low emission requirements, and price competition from Chinese rivals. The US is subject to a quota of 2.68 million tons of steel exports per year from South Korea, and additional shipments could face tariffs as high as 10-20%, with products from Mexico possibly facing a 25% levy.

Establishing a steel plant in the US will help Hyundai mitigate risks from US trade policy, reduce logistics costs, and improve its chances of qualifying for US tax credits. It will also strengthen Hyundai’s steel and automotive production in the region.

Hyundai aims to increase the share of its steel shipments to foreign automakers, with a target of 40% of its output going to companies outside the Hyundai Motor Group.