Korean steelmakers said Friday that heavy tariffs proposed by US President Donald Trump on all imported steel products would inevitably hurt their businesses.

On Thursday, Trump told reporters that the US would impose a 25 percent tariff on imported steel products after meeting with CEOs from US steel companies. The president is expected to sign an order to impose the tariffs next week. South Korea is the third-biggest steel exporter to US, after Canada and Brazil.

Expressing disappointment, steelmakers in Seoul, however, said they would seek to persuade authorities that the increased steel prices, in turn, will cause reduced global competitiveness for steel-using companies in US.

Posco, the nation’s largest steelmaker, is gearing up efforts to ask state governments for tax exemptions in case of Trump’s order takes effect.

“The measure may have an influence (damage) -- which is not small -- on the supply and price of materials in Posco’s US office and, therefore, on US industries, including automobiles and appliances that require steel,” said a spokesperson of the nation’s largest steelmaker Posco.

“We will work harder to call on the US government and related industries to exclude the materials used in Posco’s US office from the tariff measure,” Posco said. Posco has set up two companies in the US, both joint ventures, that process steel products with raw materials shipped from Korea.

The latest tariff measures will be another blow to the Korean steel industry. Currently, 88 percent of Korean steel exports to the US already have antidumping tariffs or countervailing duties imposed on them. Due to these protectionism measures, the Korean steel exports to the US saw a drop of 37.8 percent in 2017 compared to 2014.

The local steel pipe industry will be hit hardest among them. Its exports to the US account for more than half of Korea’s total steel exports to the US, which stand at around $3.2 billion annually.

“Because 2017 was good year for steel pipe exports to the US, the industry will be hit hard by the high tariffs,” said one official from a local steel pipe company.

“Still, we hope there will be some changes when the final decision is made next week,” he added. 

There is a possibility of some changes in the policies due to strong resistance from the US trading partners. After Trump’s remark, Canada and the EU said they would bring forward their own countermeasures to the new tariffs. Mexico, China and Brazil have also said they are considering retaliatory measures.

On Friday, the Korean Minister of Trade, Industry and Energy Paik Un-gyu also immediately convened a meeting with related government officials to discuss how to respond to the steel tariffs.

The government said Trade Minister Kim Hyun-chong had visited the US on Sunday to meet chief economic adviser to President Donald Trump, Gary Cohn, and US Secretary of Commerce, Wilbur Ross, to raise an issue about the trade law and called for new measures that can minimize damage to Korean companies.

Most steel-related companies -- Posco, Hyundai Steel SeAh Steel and Husteel -- saw shares drop on Friday morning.

Some local securities, however, said the US protectionism would ultimately lead to a rise in global steel prices and offset the losses of Korean steel makers.

“Following the US protectionism policy, the US steel makers are likely to respond by raising prices instead of increasing capacity. This will raise the prices of the US and global manufactures, and again increase the global steel prices,” said Baek Jae-seung, an analyst at Samsung Securities.

“The rise of the global steel industry may then offset the losses of Korean steelmakers,” he said.

By Shin Ji-hye (shinjh@heraldcorp.com)