How Will Higher US Tariffs Impact Steelmakers Amid Market Downturn?
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Synopsis
The recent doubling of US tariffs on steel and aluminum imports raises critical concerns for South Korean steelmakers already under pressure from oversupply and falling prices. How will they adapt to these new challenges? Discover their strategies and the broader implications for the industry.
Key Takeaways
- US tariffs doubled from 25% to 50% on steel and aluminum.
- South Korean steelmakers facing oversupply and price drop.
- Hyundai Steel investing US$5.8 billion in a new mill.
- POSCO supports Hyundai's project amid tariff concerns.
- Industry experts suggest a need for high-end products.
Seoul, June 4 (NationPress) A dramatic increase in US tariffs on steel and aluminum imports is poised to significantly affect South Korean steel manufacturers who are already facing challenges such as oversupply and declining prices due to an economic downturn, as reported by industry insiders on Wednesday.
US President Donald Trump has enacted an executive order that doubles tariffs on all steel and aluminum imports from 25 percent to 50 percent, with the new rates coming into effect on Wednesday (U.S. time), according to Yonhap news agency.
Local steel producers, including POSCO Group and Hyundai Steel Co., are actively exploring strategies to navigate the “U.S. steel barrier,” or at least mitigate the impact of these steep tariffs on their business operations.
In March, Hyundai Steel unveiled plans to invest US$5.8 billion in constructing an integrated, electric arc furnace-based steel mill in Louisiana by 2029, with production set to commence in the same year.
This facility, expected to produce 2.7 million tons of steel annually, aims to supply not just Hyundai Motor Co. and its subsidiary Kia Corp., but also other automakers based in the U.S.
Meanwhile, POSCO has opted to invest in Hyundai Steel's U.S. steel mill endeavor, in response to the Trump administration's decision to impose 25 percent tariffs on all steel and aluminum imports in mid-March.
In North America, POSCO operates a steel processing center in the U.S., along with a steel processing facility and automotive steel plant in Mexico.
Experts in the industry believe that recovery from this prolonged downturn will be gradual, as essential clients—the construction and automobile sectors—continue to struggle with weak demand and elevated U.S. tariffs.
“Local steelmakers must focus on producing higher-end products to navigate the current challenges, while the government should implement protective measures against an influx of low-cost Chinese goods,” stated an industry official.
As noted by experts, South Korean steel manufacturers are planning to develop more value-added products and bolster their technological capabilities to lower production costs and enhance global competitiveness.
They also aim to adopt an “item-by-item” export strategy through close collaboration with the government and industry associations.
Last year, South Korea was the fourth-largest exporter of steel to the United States, contributing 9 percent, or US$2.9 billion, of Washington's total steel imports, as per data from the U.S. International Trade Administration (ITA).
Point of View
It's crucial to recognize the resilience of South Korean steelmakers in the face of escalating tariffs. While the immediate impact is concerning, the industry's adaptability and focus on innovation will be vital in overcoming these challenges. The government must also play a supportive role in safeguarding local industries against unfair competition.
NationPress
20/08/2025
Frequently Asked Questions
What are the new US tariffs on steel and aluminum?
The US has doubled tariffs on steel and aluminum imports from 25 percent to 50 percent, effective immediately.
How will this affect South Korean steelmakers?
This significant increase in tariffs is expected to exacerbate the challenges faced by South Korean steelmakers, including oversupply and declining prices.
What strategies are steelmakers adopting?
Steelmakers like Hyundai Steel are investing in new facilities and focusing on producing high-end products to navigate the current market challenges.
What is the significance of the new steel mill in Louisiana?
Hyundai Steel's new steel mill in Louisiana aims to produce 2.7 million tons of steel per year, catering to domestic automakers and reducing reliance on imports.
How does this impact the US steel import market?
South Korea was the fourth-largest exporter of steel to the US last year, and these tariffs will likely reshape the dynamics of the US steel import market.
