South Korean Steelmakers Collaborate with Government on US Tariff Challenges

On Friday, South Korean steel companies announced their intention to work closely with the government and relevant agencies to mitigate the effects of expected tariffs imposed by the United States on all steel and aluminum imports starting next week.

U.S. President Donald Trump has been implementing tariffs on various trading partners, including Canada and Mexico, since he took office. Among these, he has introduced a notable 25 percent tariff on steel and aluminum imports effective March 12 (U.S. time).

In late February, South Korean officials sought an exemption from these tariffs during discussions in Washington, but their efforts did not produce the desired results.

The political landscape in South Korea, complicated by President Yoon Suk Yeol's brief imposition of martial law in December, has influenced Seoul's response to Trump's tariff initiatives.

POSCO and Hyundai Steel, the country's two largest steel producers, have expressed plans to consult with the government, the Korea Iron & Steel Association (KISA), and other associated entities to address the forthcoming tariffs.

A spokesperson for POSCO indicated, "We are considering various options, including the establishment of a steel plant in the United States, in response to the tariffs." Details on this potential project and other strategies were not provided.

Hyundai Steel warned that the broad tariffs could negatively impact the steel industry in the long run. Meanwhile, SeAH Steel Holdings, which operates a U.S. facility producing oil country tubular goods (OCTG) for the oil industry, also indicated concerns regarding the looming tariffs, which could adversely affect its business.

The SeAH Steel unit sold about one-fourth of its annual steel pipe production, totaling 1 million tons, in the U.S. last year, highlighting the importance of this market to their operations.

In terms of trade agreements, the Korea-U.S. free trade agreement had previously eliminated almost all tariffs, providing a favorable environment for trade. However, during Trump's first term in 2018, he imposed a 25 percent tariff on steel imports to the U.S., citing national security reasons. At that time, South Korea was granted a waiver in exchange for a yearly import quota of 2.63 million tons, corresponding to about 70 percent of Korea's average steel export volume to the U.S. between 2015 and 2017. If the new tariffs are enforced, these quotas will be lifted immediately.

In the previous year, South Korea ranked as the fourth-largest steel exporter to the United States, supplying roughly 11 percent of the total U.S. steel imports. It also stood as the fourth biggest aluminum exporter to the U.S., accounting for about 4 percent of aluminum imports.

In a related development, President Trump has delayed the implementation of tariffs on goods originating from Mexico and Canada under a trilateral trade agreement until April 2. The tariffs were initially announced due to concerns about undocumented migration and drug trafficking, but a one-month pause was agreed upon as the two neighboring countries committed to enhancing efforts against those issues.

Despite the impending tariffs, shares in POSCO Holdings saw a significant increase of 7.28 percent, reaching 317,000 won, and Hyundai Steel shares rose by 8.7 percent to 31,850 won. In contrast, the broader Korea Stock Price Index (KOSPI) fell by 0.49 percent during the same period.

Analysts attributed the rise in steel stocks to the potential involvement of these companies in a massive natural gas pipeline project in Alaska, which President Trump mentioned earlier in a congressional address as a project attracting interest from both Korea and Japan.

steel, tariffs, cooperation