45% of Korean SMEs Report Export Disruptions Amid Expanded U.S. Steel and Aluminum Tariffs

Delays in Export Contracts and Pressure to Lower Unit Prices Continue
77% of SMEs Point Out "Measures Unrelated to National Security"
Korea Federation of SMEs: "Joint Response Needed from Government and Industry"

As the United States expands the list of steel and aluminum derivative products subject to tariffs, newly affected domestic small and medium-sized enterprises are reporting disruptions in exports. Delays in contracts and pressure to reduce unit prices are mounting, making the impact increasingly visible.

According to the "Survey on the Impact of U.S. Steel and Aluminum Derivative Product Tariffs on Small and Medium Enterprises" released by the Korea Federation of SMEs on September 30, 45.3% of companies whose export items were newly added to the U.S. tariff list responded that they are already experiencing negative effects on exports. The survey was conducted from September 9 to 18 and targeted 600 small and medium-sized enterprises.

Specific negative impacts cited included: ▲delays or cancellations of export contracts by U.S. clients (60.9%), ▲passing on tariff burdens such as pressure to lower unit prices (54.3%), and ▲increased burden to develop new export markets (20.7%).

Among companies whose products were newly included in the additional measures, the most needed government support measures to resolve difficulties were: ▲activation of policy funding to respond to tariffs, such as interest rate cuts (68.5%), ▲tax support for domestic component buyers and measures to promote supply (51.7%), and ▲support for reducing production costs, such as stabilizing supply chains (43.3%).

Among all responding SMEs, 77.4% said that the additional inclusion of steel and aluminum derivative products in the tariff list does not align with the purpose of Section 232 of the U.S. Trade Expansion Act. The most common reason was that "the relevant items are not related to U.S. national security" (70.3%), followed by "the possibility of increased price burden for local consumers" (33.6%), and "insufficient domestic procurement capability due to low production in the U.S." (19.2%).

Additionally, 61% of responding companies said that their derivative product exports to the U.S. are fully customized according to individual buyers' specifications. Regarding the existence of U.S. local manufacturers capable of supplying products of equivalent quality, specifications, and unit price, 56.2% of companies said there were none; however, when asked about the time required to replace with local suppliers, 26.8% responded "less than six months." The Korea Federation of SMEs interpreted this as indicating that many companies expect replacement within the U.S. value chain next year.

Choo Moongap, Head of the Economic Policy Division at the Korea Federation of SMEs, stated, "Most of the steel and aluminum derivative products newly added to the tariff list are unrelated to U.S. national security," and added, "For the additional measures on derivative products newly implemented from September, the government and industry must work together to actively express their opinions."