The domestic steel industry is busy responding to the U.S. measures to impose tariffs and eliminate quotas on imported steel and aluminum products. Until now, Korean steel products could only be exported to the U.S. without tariffs up to a certain amount, but the quota system has disappeared in exchange for a 25% tariff. Analysts suggest that while the tariff application reduces price competitiveness, the elimination of the quota system could present an opportunity.
According to the steel industry on the 12th, the U.S. will impose a 25% tariff on imported steel and aluminum products starting at 12:01 a.m. local time, which is 1:01 p.m. Korean time, under Section 232 of the Trade Expansion Act. A total of 155 types of steel products, including bolts, nuts, and springs, as well as 11 types of aluminum products, will be subject to this tariff. Tariffs on 87 derivative items, including automotive, home appliances, and aircraft parts, have been postponed until further notice. Tariffs will be applied to these products later based on their steel and aluminum content value.
Korea exports the second most steel and aluminum products to the U.S. after the European Union, leading to expectations that damage from the tariff implementation is unavoidable. According to the Korea Iron and Steel Association, Korea exported a total of 2.77 million tons of steel products to the U.S. last year. In terms of value, this amounted to $3.5 billion, accounting for 13.1% of total exports. Korean steel products hold about 9.7% of the U.S. imported steel market, making it the fourth largest after Canada, Brazil, and Mexico.
Jeong Ik-soo, chief analyst at Korea Credit Ratings, noted that "the tariff measures will inevitably weaken the domestic steel industry's export competitiveness to the U.S." He added, "If price increases are limited to maintain market share in the U.S., profits may decline."
Some analysts suggest that the impact on price competitiveness may not be significant because U.S. steel companies have raised their product prices to reflect the tariffs on imports. According to the raw material analysis agency CRU, the distribution price of hot-rolled steel in the U.S. was $999 per ton as of the 5th, up 33.2% from $750 on January 22, just after President Donald Trump took office. The distribution price of domestic hot-rolled steel was $810 per ton as of the 7th, which is about 19% lower than the U.S. distribution price. If the tariff rate is simply applied to the domestic distribution price, it is about 1% more expensive than the U.S. distribution price.
As a result, there are forecasts that the demand for steel products in the U.S. may increase due to strong demand. This includes special steel required for the natural gas development project in Alaska, which President Trump has shown great interest in, as well as steel plates used in vehicles. Major automotive companies, including Hyundai Motor Group, plan to increase vehicle production in the U.S.
Jeong Eun-mi, a researcher at the Korea Institute for Industrial Economics and Trade, said, "Although the distribution price of steel products in the U.S. is higher than in the domestic market, the export volume was limited by the quota system. The domestic steel industry can be seen as having improved its accessibility to the U.S. market," and added, "Although there will be damage to construction materials that require price competition, products such as automotive steel plates, nickel-plated steel, and energy pipes with quality competitiveness are expected to see positive effects."
Steel companies plan to develop export strategies by item. A representative from one steel company stated, "With the elimination of the quota restrictions, we will closely monitor the market conditions in the U.S. and establish export strategies for each item," adding, "We will also closely consult with the government to respond quickly."