Seoul: South Korea's industry ministry announced that it is in active discussions with local businesses and industry leaders to formulate strategies to mitigate the impact of new U.S. tariffs on steel and aluminum imports, which are expected to significantly affect South Korean manufacturers and exporters.
According to Yonhap News Agency, the Ministry of Trade, Industry and Energy conducted an emergency meeting with officials from the Korean steel industry to evaluate the potential repercussions of the U.S. tariffs on local enterprises. Earlier, U.S. President Donald Trump signed proclamations imposing 25 percent tariffs on all steel and aluminum products entering the United States, effective March 12.
The announcement has raised concerns that South Korean companies might face direct consequences due to the impending U.S. tariffs, unlike previous tariffs on Canadian, Mexican, and Chinese goods. Last year, South Korea was the fourth-largest exporter of steel to the United States, contributing approximately 11 percent of U.S. steel imports, as per data from the U.S. International Trade Administration. The country also ranked as the fourth-largest aluminum exporter to the U.S., accounting for about 4 percent of its aluminum imports.
In 2018, Trump imposed a 25 percent tariff on all steel imports, citing national security concerns, but South Korean steel products were exempted in exchange for an annual import quota of 2.63 million tons, representing about 70 percent of Seoul's average export volume from 2015 to 2017.
During the emergency meeting, the industry ministry emphasized the importance of maintaining communication with the U.S. government to safeguard the interests of South Korean steel and aluminum industries and develop strategies to minimize the impact of the U.S. tariffs. Trade Minister Cheong In-kyo remarked that steel exports to the U.S. might decline if American-produced steel becomes cheaper than foreign products due to the new tariffs. However, he also noted potential opportunities as competition conditions will be standardized for all major steel exporters.
The ministry disclosed plans for senior officials to visit the U.S. soon to convey the concerns of Korean industries to relevant authorities. Austin Chang, president of the institute for international trade under the Korea International Trade Association (KITA), acknowledged the mix of challenges and opportunities stemming from the U.S. trade policy changes. Chang indicated that Korean steelmakers could suffer a negative impact on profitability since they might not maintain sales at original prices if U.S. tariffs are enforced. However, they might gain a competitive edge against Canada and Mexico, two of the largest steel exporters to the U.S., with the removal of the quota.
Unlike South Korea, Canada and Mexico had been exempted from both the import quota and tariffs on their U.S. steel and aluminum shipments. Meanwhile, market analysts express concerns that the proposed U.S. tariffs could also affect industries such as automotive and home appliances, which are major steel and aluminum consumers. Hyundai Motor Group, for instance, imports South Korean steel and aluminum for its North American production facilities, including its recently established plant in Georgia.
Additionally, other major Korean industries, such as the semiconductor sector, remain vigilant as Trump has warned of potential tariffs on cars, semiconductors, pharmaceuticals, and other products.