The Korean steel industry is experiencing heightened anxiety as former US President Donald Trump's potential return to office raises concerns about stricter trade restrictions. The sector, which has carefully navigated previous trade barriers, now faces the prospect of more stringent export limitations and increased tariffs that could reshape their business operations.
During Trump's first presidential term, his administration implemented significant trade measures that continue to influence global steel markets. In 2018, citing national security concerns under Section 232 of the Trade Expansion Act, the US imposed a 25% tariff on steel imports. South Korea negotiated a special arrangement, securing a quota system instead of tariffs, but this agreement could face revision under a second Trump presidency.
The current quota system allows South Korean steel manufacturers to export 2.68 million metric tons to the United States annually, representing 70% of their average export volume from 2015 to 2017. However, Trump's campaign promises of a "universal tariff" ranging from 10% to 20% on all imports, compared to the current average of 3%, has sent ripples through the Korean steel sector, prompting industry leaders to prepare for potential market disruptions.
The situation becomes more complex when considering Trump's proposed 60% tariff on Chinese products. Korean steel manufacturers face a dual challenge: potentially restricted access to the US market while simultaneously defending against an influx of Chinese steel products that might be redirected to Asian markets. This scenario could create significant pressure on domestic market prices and profitability.
Major Korean steel producers, including industry giants like POSCO and Hyundai Steel, are particularly vulnerable to these potential changes. These companies have invested heavily in developing high-quality steel products specifically tailored for the US market, and any significant trade restrictions could impact their long-term strategic planning and investment decisions.
Industry experts note that the impact extends beyond direct steel exports. The automotive and construction sectors, which are major consumers of Korean steel, could face downstream effects if trade restrictions intensify. This interconnected nature of global supply chains means that changes in steel trade policies could have far-reaching consequences across multiple industries.
The Korean steel industry is actively engaging with government officials to develop contingency plans and strengthen diplomatic channels. Industry representatives emphasize the importance of maintaining open dialogue with US counterparts and highlight the need for a coordinated response between the private sector and government agencies to protect their interests in the face of potential trade policy changes.
