South Korean steelmakers are facing new and tough challenges in the US market as the US government began imposing tariffs on all steel and aluminum imports Wednesday.
US President Donald Trump has announced a wide range of levies on some of his country's trading partners since taking office in January.
Among them are 25 percent tariffs on steel and aluminum imports that kicked off at 1:01 p.m. Wednesday, Korea time.
In response to the steep tariffs, Korean steel firms, including Posco and Hyundai Steel, said they will closely cooperate with the government and develop more high-end products to maintain their share in the US market.
"The company will put a bigger focus on developing value-added products and cutting manufacturing costs further to secure an 'unrivaled' competitiveness despite rapidly changing external market conditions," a Posco spokesperson said over the phone.
Posco has said it is considering building a steel plant in the United States to cope with the tariffs.
Hyundai Steel said the US tariffs will have a negative impact on domestic steelmakers in the mid- to long-term.
Steelmakers are concerned that the hefty tariffs may significantly affect their price competitiveness in the US market compared with local rivals, such as United States Steel Corp.
In late February, South Korean officials requested an exemption from the tariffs on steel and aluminum during their visit to Washington, but to no apparent avail.
Seoul's responses to the Trump administration's latest tariff plans have been affected by political turmoil sparked by President Yoon Suk Yeol's brief martial law imposition in December.
Under the South Korea-US free trade agreement, almost all tariffs between the two countries have already been eliminated.
During his first term, Trump imposed 25 percent and 10 percent tariffs, respectively, on all steel and aluminum imports to the US in 2018, citing national security concerns.
At the time, the US waived the tariffs on South Korean steel products in exchange for a yearly import quota of 2.63 million tons, which accounted for about 70 percent of Seoul's average export volume between 2015 and 2017.
Once the new tariffs are imposed, the quotas will be immediately abolished.
The US also imposed a 25 percent import tariff on 259 steel and aluminum derivative products.
"With the removal of the 70 percent quota (for Korean firms), we will draw up a new export strategy. We will be able to selectively ship our products to the US market," a Hyundai Steel spokesperson said.
South Korea was the fourth-largest exporter of steel to the U.S. last year, accounting for 9 percent, or $2.9 billion (4.2 trillion won), of Washington's steel imports, according to data from the US International Trade Administration.
The country was also the fourth-biggest exporter of aluminum to the US, taking up about 4 percent of the US' aluminum imports.
On Wednesday, shares in Posco Holdings, the holding company of Posco Group, jumped 5.9 percent to 314,000 won, and Hyundai Steel advanced 2.46 percent to 29,150 won. The broader Korea Stock Price Index rose 1.47 percent.
In spite of the new US tariffs, the steel stocks jumped on the possibility of their joining the Trump government's natural gas pipeline project in Alaska, analysts said.
Trump mentioned South Korea and Japan as countries interested in the "gigantic" project during his address to a joint session of Congress last week. (Yonhap)
