Korea's steel industry said it hopes protectionism against Korean steel products will not spread in response to Canada's policy to protect its domestic steel industry.
A steel industry official said on the 1st, "Canada was Korea's 14th-largest major steel export destination as of last year," and stated accordingly.
On the 26th of last month, the Canadian government decided to reduce the application threshold for steel tariff-rate quotas (TRQ) for countries with free trade agreements (FTA), including Korea, from 100% to 75% and to impose a 25% tariff on steel derivatives.
This is a measure in response to the U.S. government's imposition of high tariffs on Canadian steel exports to the United States. Canada had previously set TRQ application thresholds based on 2024 import volumes at 50% for non-FTA countries and 100% for FTA partners such as Korea.
With this step, the TRQ application threshold for FTA partners such as Korea has been reduced again from the current 100% to 75%. Going forward, for Korean steel products, a 50% tariff will be imposed on volumes exceeding 75% of last year's exports to Canada. Under the Korea-Canada FTA, Korean steel products had been tariff-free, but now they face high tariffs. According to the Korea International Trade Association, Korea exported about 620,000 tons (t; $780 million) of steel products to Canada last year.
With Canada expanding steel tariffs following the United States, domestic steelmakers are on high alert. As export barriers rise, including the European Union (EU) considering introducing steel tariff-rate quotas (TRQ), concerns are growing that export conditions for Korean steel products will worsen further.
An official at a mid-sized steel company said, "As the steel market slump drags on, we are concerned that the protectionism that began in the United States is spreading globally, creating many constraints on steelmakers seeking alternative markets outside the United States and the EU," adding, "Chinese steelmakers are already engaging in cutthroat competition in some markets such as the Middle East, so we expect significant difficulties in developing new markets going forward."
Large steelmakers are unveiling North American investment plans to mitigate the negative impact of the U.S. expansion of steel tariffs. Hyundai Steel and POSCO Group decided to push ahead with building an electric-arc-furnace integrated steel mill in Louisiana with a $5.8 billion investment.
A steel company official said, "As global protectionism intensifies by the day, we are waiting for swift follow-up measures from the government," adding, "We plan to continue working closely with the government to actively discuss strengthening international competitiveness and trade issues."
Meanwhile, the government expressed regret over Canada's policy to protect its domestic steel industry and urged its withdrawal the same day. According to the Ministry of Trade and Industry (MOTI), Deputy Minister Park Jeong-seong held talks that morning with Alexandra Dostal, senior associate deputy minister at the Canadian Ministry of Industry, who is visiting Korea, regarding Canada's steel industry protection policy.
Park said, "Canada's measure is highly likely to violate trade law," adding, "It runs counter to the spirit of the 'Ottawa Group,' which Canada leads, as well as the rules-based trading order under the World Trade Organization (WTO)."
Park added, "The measure is likely to seriously affect our corporations' investment in Canada," and urged, "Please pay special attention so as not to hinder the potential for expanded economic and strategic cooperation between the two countries."