Korea and the United States have agreed on a mutual tariff of 15%, causing tension in the boiler and agricultural machinery industries. Companies in these sectors that are working hard to expand their market share in the United States are contemplating strategies to maintain revenue.
According to industry sources on the 31st, boiler corporations KD Navien and Kiturami, along with agricultural machinery corporations Daedong and TYM, are struggling to devise measures regarding this tariff agreement. They plan to specify these measures as soon as the summer vacation period concludes.
The U.S. is an indispensable market for the boiler and agricultural machinery industries to achieve sales growth. KD Navien generates over half of its total revenue from the U.S. In the first quarter of this year, overseas revenue accounted for 71% of total revenue, with North American revenue exceeding 60%.
Kiturami, which has only 10% of its revenue from overseas, is tapping into the U.S. market with high-efficiency condensing boilers and instantaneous water heaters as its main products. The company aims to raise its overseas revenue ratio to 50% by 2030.
The situation is no different for Daedong and TYM, which export tractors to the U.S. While Daedong's North American corporation revenue includes Canadian figures, making it difficult to isolate U.S. sales, industry evaluations indicate that a significant portion of North American revenue comes from the U.S. TYM also reported that 56% of its consolidated revenue of 788.8 billion won last year, amounting to 442.8 billion won, was generated from the U.S.
In the context of focusing on U.S. market share, these companies have encountered the challenge of tariffs.
Concerns grew after U.S. President Trump announced earlier this month that he would apply a 25% tariff on all imported goods.
The imposition of tariffs can reduce product price competitiveness, potentially leading to decreased local consumer demand and worsening revenue. Selling prices of products may rise by the amount of the tariff.
President Trump confirmed a mutual tariff of 15% on Korea, contingent upon Korea's investment of $350 billion (about 487 trillion won) in the U.S., but there are still concerns in the industry about diminished export competitiveness due to the burdens of tariffs.
Boilers and agricultural machinery have not been subject to tariffs until now. However, in March, U.S. steel manufacturers requested that boilers be included as targets for tariff imposition. The U.S. government decided to impose a 25% tariff on foreign steel and aluminum beginning in March, which also included agricultural machinery.
Items excluded from this agreement, such as steel, aluminum, and copper, will face a 50% tariff. There are projections that tariffs of up to 50% could apply to agricultural machinery parts based on the steel and aluminum content ratio.
One customs official stated, 'Agricultural machinery parts may be assigned separate item classifications (HS codes) based on their steel and aluminum content and structure, rather than the 15% tariff,' and added, 'Since it has been only a short time since the tariff agreement was made, we need to watch how the product classification will play out.'
The industry has proactively established internal response measures in consideration of tariff imposition.
A Daedong representative explained, 'Considering market conditions, we recently implemented an approximate 5% increase in North American selling prices,' and added, 'We will decide on what plans to activate based on consumer sentiment, economic trends, and local competitors' pricing and promotion programs.'
A representative from a boiler company also mentioned, 'Since we had prepared response measures in advance, once the specific details regarding tariffs become clear, it won't take long to establish our countermeasures.'