South Korean Steelmakers Uneasy About U.S. Tariffs

Steel products are stacked high at the Port of Pyeongtaek in Gyeonggi Province as South Korean steelmakers face new challenges.

Concerns Over New Tariffs

On a recent Monday, South Korean steelmakers expressed alarm after U.S. President Donald Trump announced that he would impose a 25 percent tariff on all steel and aluminum imports into the United States. This move has stirred up anxiety about the future of Korean steel exports to the U.S.

Following reports of Trump’s proposed measures, investors reacted swiftly, selling shares in major South Korean steel companies, including Hyundai Steel, POSCO, and Dongkuk Steel, right at the start of trading.

Government Meetings and Industry Reaction

In response to this unexpected announcement, the South Korean government held meetings to formulate counterstrategies against the proposed tariffs. President Trump, while speaking on Air Force One, stated that these tariffs would revitalize the U.S. steel industry. He claimed that investments from companies like Japan's Nippon Steel into U.S. steelmakers would help strengthen this sector.

Past Experiences with Tariffs

This announcement is the first significant indication of Trump’s focus on specific sectors for tariffs during his second term. Previous tariffs put in place during Trump’s first term allowed South Korea a tariff-free export quota of up to 2.63 million tons. This quota was based on past steel exports between 2015 and 2017 but has led to annual negotiations among South Korean steelmakers to allocate their respective export shares.

An insider from one of South Korea's steel companies expressed concerns that the U.S. government might shift to a zero-base approach for determining these quotas, suggesting they could impose higher demands on South Korean steelmakers in exchange for retaining tariff-free status.

Future Prospects and Industry Positioning

In an email released earlier this month, the White House pointed out Hyundai Steel's consideration of building a facility in the U.S. as a justification for the tariffs. However, Hyundai Steel clarified that no decisions have been made yet on establishing the plant and that they are still exploring options to maintain competitiveness.

Government Response

Domestic steel industry representatives urged the South Korean government to prevent unreasonable demands from the U.S., highlighting the risk of inflation in the U.S. that could arise from imposing these tariffs. They emphasized the importance of Korean steel in the American energy supply chain.

In light of these developments, South Korea’s finance ministry reported that acting President Choi Sang-mok consulted with foreign and trade ministers to strategize responses to the announcement. The Korea Iron & Steel Association also convened an emergency meeting to address the potential fallout from Trump's decision.

Deputy Trade Minister Park Jong-won indicated that the government would leverage all available resources, including its diplomatic channels in the U.S., to glean further details about the proposed tariffs. He assured the public that efforts would be made to minimize the impact on Korean companies.

Tariffs, Steel, Economy