[Column] Why Korean Companies Are Concerned About US Tariff Increase on Chinese Steel

Recently, steel-related stocks in the domestic stock market have risen together, drawing attention. POSCO Holdings' stock price increased by 0.63%, while Hyundai Steel and Dongkuk Steel each closed up by 1-2%.

The reason steel stocks smiled for the first time in a while was due to the U.S. government's announced 'China crackdown' policy. Expectations grew that Korea might relatively benefit from this. U.S. President Joe Biden announced a plan to raise tariffs on Chinese steel from the current 7.5% to 25%, based on Section 301 of the Trade Act. This move aimed to curb China's low-priced supply offensive.

Our government recently held a confidential export-import issue meeting with the steel industry. The 1 hour and 30 minutes meeting reportedly devoted a significant amount of time to responding to the influx of low-priced Chinese steel. There was also a glimpse of hopeful sentiment that export volumes to the U.S. market might increase.

However, what caught the reporter's eye during the meeting was the recent U.S. move to triple tariffs on Chinese steel. The steel industry conveyed to the government that "there is growing concern that the U.S. trade remedy measures might expand to target Korean products." At the time of the U.S. tariff announcement, many in the steel industry evaluated that "the existing anti-dumping and countervailing duties imposed by the U.S. on Chinese steel products already reach up to 400-500%, effectively making Chinese exports to the U.S. impossible." The meeting also revealed a sentiment that the reflective benefits for our steel industry would not be significant.

Participants in the meeting said, "Export expansion due to trade remedy measures targeting low-priced Chinese products will be limited," and "there is a possibility that the U.S. will expand regulations to Korean steel products." This expressed a sense of crisis that the U.S., which is strengthening protectionism, might shift its target from China to Korea next. In fact, during the Donald Trump administration in 2018, the U.S. limited Korea's steel exports to the U.S. to 2.63 million tons annually.

Looking at the U.S. situation, the steel industry's concerns seem to be becoming a reality. Especially in the manufacturing sector, the 'America First' policy is intensifying. Without drastic measures, not only individual Korean steel companies but the entire industry could be shaken. The sentiment of an executive met before the meeting, who said "survival is at stake," is understandable.