S. Korea steel exporters brace for duties

South Korea is bracing for the impact of the United States' tariff measures as the government in Seoul discusses measures to minimize the risks to the nation's steel exporters' profitability.

The government said on Wednesday that it will hold an export strategy meeting next week to discuss measures to support businesses and explore ways to diversify export markets, according to Yonhap News Agency.

"Uncertainty in the global trade environment is increasing," South Korean acting President Choi Sang-mok was quoted as saying. The previous day, Choi said the government would push for last-minute negotiations with the US before the tariffs take effect.

The move came after US President Donald Trump's announcement on Monday that the country would impose a 25 percent tariff on all steel and aluminum imports starting March 12.

During a meeting with ministers on economic issues, Choi said the government would assess the potential impact of the US tariffs on various industries and take preemptive and comprehensive measures if necessary.

After Trump's announcement, South Korea's Trade Minister Cheong In-kyo also said the tariff may reduce the nation's steel exports to the US and affect the profitability of steel exporters. The ministry has held a meeting with major steel companies to discuss possible countermeasures.

South Korea should avoid responding hastily and needs to prepare contingency plans, Yang Jun-sok, an economics professor at the Catholic University of Korea in Seoul, told China Daily.

"Currently, I am not sure if the government has a strategy ready — most of its attention is occupied by the domestic political turmoil — and we do not know the full extent of what Trump tariffs are going to be," said Yang.

Given the uncertainty, South Korea needs more time to chart a disciplined and flexible response strategy that also factors in the actions of other affected countries, said Yang.

South Korea was the US' fourth-largest supplier of steel in 2024, after Canada, Mexico and Brazil, according to data from the US International Trade Administration.

The country was also the fourth-largest exporter of aluminum to the US, accounting for about 4 percent of US aluminum imports.

The latest US steel tariff will have a negative impact on South Korea's economy to the extent of around 0.11-0.22 percent of GDP, according to Reuters, citing a report by Citibank.

Growth forecast

The Korea Development Institute, South Korea's state-run think tank, on Tuesday cut its growth forecast for the country this year by 0.4 percentage points to 1.6 percent. The deterioration of the trade environment following US policy changes was among the key factors in the downward revision.

Although South Korea is bound to take a hit due to the high tariff rates, the removal of its import quota potentially allows the nation to expand its market share in the US, which could help mitigate the economic damage, said Yang.

In 2018, the US imposed a 25 percent tariff on steel imports and a 10 percent duty on aluminum imports during Trump's first term. But his administration granted South Korea a duty-free steel quota of up to 2.63 million metric tons per year in return for import quotas, which were terminated in the new tariff plan.

"In the end, whatever response South Korea makes, it needs to involve something to 'give' to the US (in terms of more imports) as well as threats (such as a retaliatory response)," said Yang.

Some experts also expect that the Trump administration, during negotiations, will ask South Korean companies to contribute to the US economy.

Trump's tariff plan has already prompted South Korean steelmakers to expand their investment in the US. In January, local media reported that Hyundai Steel, a major local steel company, was considering building a steel mill in the United States with an investment of up to $7 billion.

As Trump said, his administration will announce "reciprocal tariffs" on other countries and is considering additional tariffs on automobiles, semiconductor chips and pharmaceuticals, concerns were raised that more South Korean companies might find themselves directly in the line of fire.

kelly@chinadailyapac.com