Seoul/Singapore — Shares in South Korean and Vietnamese steelmakers, major Asian exporters of the metal to the US, dropped on Monday after US President Donald Trump said he would double tariffs on imported steel and aluminium to 50%.
Trump announced on Friday the new steel and aluminium levies, which take effect on June 4, intensifying a global trade war just hours after he accused China of violating an agreement with the US to mutually roll back tariffs and trade restrictions for critical minerals.
Steel industry experts said that while the increased tariff would cause significant disruption for major exporters to the US, the rates could go down in light of some of Trump’s trade policy reversals.
“Frequent shifts in the Trump administration’s tariff policies introduce considerable uncertainty regarding the actual impact ... I think the final result will be far lower than initially projected, especially concerning its duration,” said Chelsea Ye, senior analyst at metals research firm McCloskey.
South Korea’s industry ministry said in a statement on Monday it would respond to the 50% tariff on steel products as part of its trade discussions with Washington to minimise the impact on industry.
South Korea was the fourth-biggest exporter of steel to the US last year, behind Canada, Mexico and Brazil, according to American Iron and Steel Institute data.
The ministry said it had held an emergency meeting with officials from the country’s major steelmakers, including Posco and Hyundai Steel.
Steelmakers’ shares lost ground on Monday, with Posco and Hyundai Steel falling 3% and SeAH Steel Corporation down 8%.
In Vietnam, major steelmakers Hoa Sen Group and Nam Kim Steel fell 2.8% and 3.4%, respectively. Vietnam Steel Corporation also fell 2.7%.
Vietnam’s exports of steel and steel products to the US fell 27% in the first four months of this year, government data showed.
The 50% tariffs will add to the challenges facing Korean steel exporters, which have refrained from sharply boosting exports to the US to avoid Washington's scrutiny, despite rising US steel prices, an industry executive said.
“It will be a burden to exporting companies if there are no additional steel price increases in the U.S,” he said, asking not to be identified due to the sensitivity of the issue.
Despite tariffs, South Korea's steel shipments to the US rose 12% in April from a year earlier, according to trade data.
Steel and aluminium tariffs were among the earliest Trump imposed when he returned to office in January. The tariffs of 25% on most steel and aluminium imported to the US went into effect on March 12.
Industry officials said the tariffs had increased US steel prices, affecting several sectors, including home appliances, cars, and construction.
In Europe, Germany’s second-biggest steelmaker Salzgitter warned that Washington’s tariff policy was dealing a severe blow to European industry.
Trade talks
South Korea, a major US ally, has called for an exemption from tariffs on steel, vehicles and others items, during talks with the US.
Seoul agreed in late April to craft a trade package by the end of the 90-day pause on Trump’s reciprocal tariffs in July, but it has been difficult for negotiators to make big decisions due to a political leadership vacuum ahead of elections on Tuesday.
In late March, Hyundai Steel announced a plan to build a $5.8bn factory in Louisiana in response to US tariffs, but the factory will not open until 2029. In April, Hyundai Steel’s bigger rival Posco signed a preliminary deal to make an equity investment in the factory project.
In India, which relies heavily on the US for aluminium exports, industry experts also warned of a major hit.
“This is going to have a detrimental impact,” BK Bhatia, director-general at the Federation of Indian Mineral Industries, the country’s leading mining body, said.
“The US is the biggest market for Indian aluminium. Government has been negotiating so we are hopeful that with talks, the tariffs will come down.”
The US is the world’s largest steel importer, excluding the EU, with a total of 26.2-million tonnes of imported steel in 2024, according to the department of commerce.
As a result, the new tariffs are likely to increase steel prices across the board, hitting industry and consumers alike.
“The latest hike will prompt these sellers to renegotiate with their US buyers on how to, and who, will shoulder the extra 25% cost,” said Thaiseer Jaffar, founder of Dubai-based steel industry event organiser Global Steel Summit.
Reuters
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