South Korean Steelmakers Concerned About Proposed U.S. Tariffs

Steel products are piled at the Port of Pyeongtaek in Gyeonggi Province, Monday. Yonhap

On Monday, South Korean steelmakers faced renewed anxiety as U.S. President Donald Trump announced plans for a 25 percent tariff on all steel and aluminum imports into the United States.

The news sparked a quick negative reaction in the stock market, as investors began selling shares of major South Korean companies like POSCO, Hyundai Steel, and Dongkuk Steel during the early trading hours.

In response to this situation, the South Korean government held urgent meetings to discuss potential countermeasures against the new tariffs proposed by the U.S.

Trump made the tariff announcement while speaking to reporters on Air Force One. This declaration marks the first time specific sectors have been named for potential universal tariffs under his second administration. "Tariffs are going to make it very successful again, and I think it has good management," Trump stated, referring to U.S. Steel and a recent investment by Japan’s Nippon Steel.

However, Trump did not provide information on whether there would be changes to the current tariff-free import quotas.

During Trump’s first term, South Korea was allowed to export up to 2.63 million tons of steel to the U.S. without tariffs. This decision was part of the 25 percent tariff on steel imports and a 10 percent tariff on aluminum, implemented in March 2018.

The quota was pegged at 70 percent of the average annual steel exports from South Korea to the U.S. between 2015 and 2017. Since then, South Korean steelmakers have had to negotiate their specific shares of this quota annually in order to proceed with exports.

An official from one of South Korea's major steelmakers, who requested anonymity, commented that Trump’s previous threats to impose tariffs on trading partners like Canada and Mexico, despite their trade agreements, raises the possibility that import quotas may be renegotiated from scratch. "His government is likely to ask us to contribute more to the U.S. economy in exchange for maintaining the tariff-free quotas," the official stated.

Earlier this month, an email from the White House highlighted Hyundai Steel's consideration of establishing a plant in the U.S. as a key justification for the necessary tariffs. However, Hyundai Steel clarified on Friday that no final decision has been made regarding their potential investment.

Meanwhile, officials in the South Korean steel industry have urged their government to resist what they describe as "unreasonable" demands from the U.S. They have pointed out the risk of U.S. inflation due to these tariffs and emphasized that Korean steel products play a crucial role in the U.S. energy supply chain.

Reacting to Trump’s remarks about the tariffs, South Korea’s finance ministry announced that Acting President Choi Sang-mok has been in discussions with foreign and trade ministers to formulate a response. The trade ministry also held an emergency meeting at the Korea Iron & Steel Association.

Deputy Trade Minister Park Jong-won noted, "The government will mobilize all possible networks, including our diplomatic missions in the U.S., to gather more specifics about the tariffs. We will work closely with the industry to minimize impacts on Korean companies."

steel, tariffs, economy