[Column] Korean Companies Bow to US Tariff Policies

"Now, we have to consider the export route to the United States completely blocked."

A practical worker from a kitchenware company I recently met said this, adding, "Competition with local Chinese companies has become even fiercer, making it increasingly difficult to supply to China." This company, based in Seoul and Ansan, manufactures kitchenware made from stainless steel and aluminum, exporting most of its products. With the largest export market, the United States, now blocked, the company is facing difficulties. On the day I met him, he was busy trying to finalize an export contract with a local Indonesian company.

The impact of the 25% additional tariffs on steel and aluminum, enacted by President Donald Trump through an executive order effective from the 12th (local time), is already manifesting harshly for domestic companies.

Currently, a total of 259 steel and aluminum derivative products are subject to additional tariffs. This is where the cruel and persistent aspect of the Trump administration’s second-term tariff policy lies. Not only the originally targeted general aluminum products such as building materials but also all other derivatives including fishing, kitchen, electrical, electronic, machinery, automobile, aerospace, and semiconductor parts are included. In short, any product containing even a small amount of aluminum is subject to the 25% additional tariff.

Aluminum is widely used due to its advantages of being lightweight, strong, and easy to process, which amplifies the impact. South Korea ranks fourth in steel exports to the U.S. and third in aluminum exports. This means the impact of the reciprocal tariff policy, effective from April 2, is significant.

Korean companies now have to open new sales channels not in the U.S. but in Asia and Europe. It is obvious that the position of Korean consumer goods, which lag behind China not only in price competition but also in product competitiveness, will become even narrower.

The problem is that the global trade environment is tough not only in the U.S. but worldwide. Even before President Trump ignited the trade war, we had already witnessed a global trend toward strengthened protectionism. For example, Indonesia has repeatedly tightened import regulations in 2023?2024 under the pretext of protecting its domestic industries. Whereas direct exports to Indonesia were previously possible, now local large distributors, purchasing cooperatives, and retail stores?‘distributors’ (distribution partners)?must be involved. This is known as a ‘passage fee.’ The increased costs become non-tariff barriers.

Canada and the European Union (EU) immediately opposed the U.S. steel and aluminum tariffs and retaliated with counter-tariffs. Meanwhile, our government appears to be taking a cautious approach, focusing more on behind-the-scenes negotiations. Although the current administration is making efforts, such as Commerce Negotiations Chief Jeong In-gyo’s scheduled visit to the U.S., it is clear that negotiations will not be easy against President Trump, who is widely recognized as a ‘master negotiator.’ We hope the government can demonstrate skillful negotiation for the sake of Korean companies.