With the joint fact sheet (JFS) documenting the results of the Korea-U.S. tariff negotiations officially released on the 14th, the auto and shipbuilding industries are relieved. These sectors are expected to accelerate business normalization, including improved export profitability and recovery of market share in North America. However, the steel industry, which was excluded from the tariff talks, has gone on high alert as it will be subject to a "50% tariff rate."
According to the details of the trade agreement released by the Korean and U.S. governments that day, the United States decided to lower the Section 232 tariff under the Trade Expansion Act on Korean-made automobiles and auto parts from 25% to 15%. Domestic automakers appear likely to receive retroactive application of the new tariff rate as of Nov. 1.
Hyundai Motor Group, Korea's largest auto group and the world's No. 3 automaker, said, "We thank the government for its dedicated efforts throughout the difficult negotiations leading up to the agreement," adding, "Hyundai Motor and Kia will continue to pursue diverse measures to minimize the impact of tariffs while further strengthening fundamentals through quality and brand enhancement and technological innovation."
Korean-made cars have suffered deteriorating profitability due to the 25% tariff imposed since April. The market expects profitability at domestic automakers, including Hyundai Motor Group, to recover. As the announcement was delayed after the negotiations, Korean-made cars have borne a tariff 10 percentage points higher than Japanese and European models that concluded talks with the United States earlier. Daishin Securities Co. projected that if the U.S. auto tariff falls from 25% to 15%, Hyundai Motor Group's operating profit next year would increase by about 2.4 trillion won.
However, as the relative advantage (2.5%) of Korean export cars in the U.S. market under the Korea-U.S. free trade agreement (FTA) has disappeared, some predict competition with Japanese brands will intensify.
The shipbuilding industry, the crux of the tariff deal, welcomed the renewed emphasis in the joint explanatory material on the importance of Korea-U.S. shipbuilding cooperation and pledged full support.
Hanwha Group, the parent group of Hanwha Ocean, which owns Hanwha Philly Shipyard Inc., said, "We welcome the finalization of the Korea-U.S. tariff and security negotiations fact sheet," and "we thank the government officials who devoted themselves during the negotiation process." It added, "Hanwha strongly supports the government's security policy stance and decisions and will continue to align with the national direction as we have so far."
Hanwha Group also promised additional investment in Hanwha Ocean and active support for Korea-U.S. shipbuilding cooperation.
Hanwha Group said, "In line with the decision to strengthen the alliance and security of the two countries, we will work not only on investment and expansion of the Hanwha Ocean Geoje shipyard but also on mutual growth with local partner companies," adding, "We will also apply the Geoje shipyard's technology and capabilities to local sites such as the U.S. Philly Shipyard to faithfully fulfill our role as the best Korea-U.S. security partner."
It continued, "We plan to build infrastructure for not only commercial vessels but also future warship construction through additional shipyard investments in line with the needs of rebuilding the U.S. shipbuilding industry."
However, steelmakers exporting steel to the United States, such as POSCO and Hyundai Steel, are in crisis. The United States currently applies a 50% tariff rate to steel and aluminum. In the first half of this year, Korea's steel exports to the United States fell 11% from a year earlier. Because the same tariff rate applies to more than 400 derivative products containing steel, including transformers, home appliances, bolts, and nuts, the burden has grown across domestic manufacturing.
A steel industry official said, "Amid an overall downturn in the steel market, significant difficulties have been added to exports to the United States," adding, "We are asking the government to consult with U.S. authorities so that the tariff rate can be eased."
A POSCO official said, "There was no separate mention of steel-related matters in the conclusion of this tariff negotiation, so we have no particular position," adding, "We will continue monitoring related to steel tariffs while communicating with the government."