US to start imposing 25% tariffs on Korean steel March 12

Gov't remains uncertain about how to counteract Trump's trade policies

By Park Jae-hyuk

U.S. President Donald Trump decided on Monday (local time) to impose a 25 percent tariff on steel imports from Korea starting March 12, effectively nullifying up to 2.63 million tons of the annual tariff-free quota that had been agreed upon between the two countries in 2018 during his first term.

The decision was part of his previously announced proclamation, signed the same day, to impose a 25 percent tariff on all steel and aluminum imports into the United States, effective March 4.

In a document released by the White House a few hours after Trump signed the proclamation, the U.S. president said that tariff-free quota deals signed with Korea and other major metal exporters would be terminated to protect American industries.

"Increasing and persistently high import volumes from countries exempted from the duties or subject to other alternative agreements like quotas and tariff-rate quotas have captured the benefit of U.S. demand at the domestic industry’s expense and transmitted harmful effects onto the domestic industry," Trump said in the document.

"From 2022 to 2024, imports from countries subject to quotas (Argentina, Brazil and South Korea) increased by approximately 1.5 million metric tons, even as U.S. demand declined by more than 6.1 million tons during the period."

Before the disclosure of the document, the Korean government expressed cautious optimism that Washington may maintain the quotas, even though Trump told reporters that there would be no exceptions or exemptions.

Trump's consideration of exempting Australia from new metal tariffs, a country that has suffered losses in its trade with the U.S., also supported this hopeful line of thinking, despite Korea's years of trade surpluses with the U.S.

However, as Korea failed to avoid the U.S.' new steel tariffs, Trade Minister Cheong In-kyo convened a meeting with POSCO, Hyundai Steel, Novelis, and other metal exporters later on Tuesday to discuss countermeasures against the U.S. policies.

"Although there exist concerns about decline in steel exports to the U.S., opportunity factors also persist as Korea can compete with other major steel exporters under the same conditions," Cheong said.

The government vowed to ensure that the Korean steel industry's voice is heard during the forthcoming dispatch of a delegation to the U.S., emphasizing its plan to negotiate with Washington to protect domestic companies.

Steel industry officials forecast that the Trump administration will ask Korean companies to contribute to the U.S. economy during the month-long negotiations ahead of the steel tariffs' enforcement.

After signing the proclamation, Trump told reporters that steelmakers will be able to avoid tariffs if they make their products in the U.S.

Earlier this month, the White House cited Hyundai Steel's "active" consideration of building a U.S. plant as one of the reasons why Trump's tariffs are considered a "necessary solution," although it remains uncertain whether the steelmaking unit of Hyundai Motor Group will move forward with the plan.

"Trump may ask Korea to increase investments in the U.S. automotive and semiconductor industries, given his warning of imposing universal tariffs on those sectors," an official from one of Korea's major steelmakers said.

Stronger ties with Canada

Amid escalating global trade tensions following Trump's protectionist policies, the Canadian province of Alberta hosted a forum on the same day to encourage Korea's investment in the energy industry.

The North American country, which will also be subject to the new U.S. metal tariffs, managed to avoid 25 percent U.S. tariffs on all of its goods earlier this month, following Trump's decision to delay their imposition for a month. However, concerns are lingering over potential negative impacts on Korean battery firms doing business in Canada.

Remaining cautious about mentioning Trump's tariff threats during the forum, both the Canadian and Alberta governments emphasized their strong economic ties, based on the Indo-Pacific strategy.

"Canada's Indo-Pacific strategy highlights the importance of deepening engagement with Korea and other key partners in the region," Canadian Ambassador to Korea Tamara Mawhinney said. "Canada and Korea share a strong and dynamic relationship, and by continuing to work together, I believe we can build a more resilient, sustainable and prosperous future for both of our countries."