The Donald Trump administration has released a draft notice that includes transformers in the list of tariff derivatives for steel and aluminum, causing domestic electrical equipment stocks to trend downward on the 18th.
LS ELECTRIC shares traded at 292,500 won on the KOSPI market at 9:15 a.m. that day, dipping 4.72% (14,500 won) from the previous trading day.
At the same time, shares of HD Hyundai Electric, Cheil Electric, and Hyosung Heavy Industries are also showing weakness.
This weakness is attributed to the tariffs. The U.S. Department of Commerce noted on the 15th via the Federal Register that it would add 407 product codes under the Harmonized Tariff Schedule of the United States (HTSUS) to the scope of 50% tariffs imposed on steel and aluminum derivative products. Transformers were also included. The tariffs take effect from that day.
The U.S. announced in March that it would impose a 25% tariff on steel and aluminum products, and just three months later, in June, it raised the tariff rate to 50%. It also stated that starting from June 12, it would impose a 50% tariff on electrical appliances that use steel, such as refrigerators, dryers, washing machines, and dishwashers, based on their steel content. The list of items subjected to tariffs has now expanded.
However, some analyses indicate that the impact will be limited. This is because the measure imposes a 50% tariff not on the entire transformer but only on the steel content.
The steel proportion within the cost of transformers is estimated to be about 35%, leading to an effective tariff rate of approximately 18%. This suggests that the tariff rate is not considered a sharp increase compared to the previous mutual tariff rate of 15%.
Son Hyun-jung, a researcher at Yuanta Securities Korea, said, "HD Hyundai Electric and Hyosung Heavy Industries have local production bases in the U.S., so the impact is limited," noting that "Sanil Electric, ILJIN Electric, and LS ELECTRIC are also engaging positively in negotiations over tariff sharing and price pass-through with North American clients, so the actual impact is expected to be small."