Seoul, June 4 (IANS) A two-fold increase in US tariffs on steel and aluminum imports is expected to deliver a heavier blow to South Korean steelmakers already grappling with oversupply and falling prices amid an economic slowdown, industry sources said on Wednesday.
US President Donald Trump has signed an executive order doubling tariffs on all steel and aluminum imports from 25 percent to 50 percent, with the new rates taking effect Wednesday (U.S. time), reports Yonhap news agency.
Local steelmakers, including POSCO Group and Hyundai Steel Co., have been seeking ways to cope with the “U.S. steel barrier,” or at least minimize the impact of the steep tariffs on their operations.
In March, Hyundai Steel announced plans to invest US$5.8 billion to build an integrated, electric arc furnace-based steel mill in Louisiana by 2029, with production scheduled to begin in the same year.
The 2.7-million-ton-a-year facility is expected to supply steel not only to Hyundai Motor Co. and its smaller affiliate Kia Corp. but also to other U.S.-based automakers.
Its larger rival, POSCO, has decided to invest in Hyundai Steel’s U.S. steel mill project, following the Trump administration’s move to impose 25 percent tariffs on all steel and aluminum imports in mid-March.
In North America, POSCO operates a steel processing center in the U.S., along with a steel processing facility and an automotive steel plant in Mexico.
Industry experts say it will take time for the steelmakers to recover from the prolonged downturn, as their key customers — the construction and automobile sectors — continue to face sluggish demand and high U.S. tariffs.
“Local steelmakers need to produce more high-end products to overcome the current challenges, while the government should introduce measures to protect them from an influx of low-priced Chinese products,” an industry official said.
As experts have noted, South Korean steelmakers plan to develop more value-added products and enhance their technological capabilities to reduce manufacturing costs and strengthen global competitiveness.
They also intend to implement an “item-by-item” export strategy through close consultations with the government and industry associations.
South Korea was the fourth-largest exporter of steel to the United States last year, accounting for 9 percent, or US$2.9 billion, of Washington’s total steel imports, according to data from the U.S. International Trade Administration (ITA).
–IANS
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