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US threatens to impose tariffs of at least 53% on Korean steel products
By Jun Ji-hye
POSCO and other Korean steelmakers face stiffer tariffs on their exports to the United States after the Donald Trump administration threatened to apply safeguard measures to their products.
The U.S. Department of Commerce (DOC) has recommended Trump take strong measures to safeguard the country's steel industry. Trump is highly likely to accept the recommendation.
The DOC came up with three recommendations of a global duty of at least 24 percent on all steel imports, a tariff of at least 53 percent on steel imports from 12 countries including Korea, or the introduction of an import quota.
It would mark back-to-back attacks on Korean companies as Trump recently signed safeguard measures slapping 50 percent tariffs on washers exceeding 1.2 million units a year.
"In consideration of his previous actions, I am very concerned that Trump would go ahead with the 53 percent-plus tariff policy because it would be the strongest and most effective. Then, one of the worst victims would be Korea," said a Seoul analyst who asked not to be named.
The U.S. president is required to make a decision on the steel and aluminum safeguard measures by April 11. Any tariffs and quotas would be in addition to any duties already in place.
According to DOC data, Korea exported 3.7 million tons of steel products to the world's largest economy last year to take the No. 3 position following Canada with 5.8 million tons and Brazil with 4.7 million tons. Mexico and Russia also topped 3 million tons with 3.2 million tons and 3.1 million tons, respectively.
But Canada and Mexico are not included in the 12-country list, which means that Brazil, Korea and Russia would be the main targets. The other nine countries are China, Costa Rica, Egypt, India, Malaysia, South Africa, Thailand, Turkey and Vietnam.
The announcement prompted the Korean government and associated corporations, including the nation's largest steelmaker POSCO and second-largest player Hyundai Steel, to scramble for countermeasures.
On Saturday, Trade, Industry and Energy Minister Paik Un-gyu convened a meeting to discuss the aftershocks of the potential tariffs.
CEOs of POSCO and Hyundai Steel took part in the meeting together with senior government officials although it was just a day after Lunar New Year's day.
"Both the public and private sectors will cooperate to persuade the U.S. government, Congress and steel industries. We will also analyze all the scenarios to minimize any negative impacts," an industry minister official said after the contingency meeting.
Given the strong stances of both the DOC and Trump, however, such efforts are not likely to work. In particular, the DOC concluded that the quantities and circumstances of steel imports "threaten to impact national security."
"I am glad that we were able to provide this analysis and these recommendations to the President," Commerce Secretary Wilbur Ross said. "I look forward to his decision on any potential course of action."
Through the maneuver, the DOC strives to increase the domestic steel production of the U.S. from its present 73 percent of capacity to approximately an 80 percent operating rate, which it says is the minimum rate needed for the long-term viability of the industry.
A total of 10 furnaces have closed since 2000 in the U.S. while employment has dropped by 35 percent since 1998, the DOC said.
"The declining steel capacity utilization rate is not economically sustainable. Utilization rates of 80 percent or greater are necessary to sustain adequate profitability and continued capital investment, research and development, and workforce enhancement in the steel sector," the DOC said in a report.
"The only effective means of removing the threat of impairment is to reduce imports to a level that should, in combination with good management, enable U.S. steel mills to operate at 80 percent or more of their rated production capacity."
