U.S. President Donald Trump stated on Jan. 6, “If I hadn’t imposed massive steel tariffs, there wouldn’t be a single steel plant left in America.” Later, on Jan. 31, he announced plans to impose tariffs on steel, aluminum, and copper, emphasizing the need to protect these industries.
As Trump reiterates plans to impose steel tariffs, concerns are mounting within South Korea’s steel industry, a key pillar of the nation’s economy. Already struggling with a global economic slowdown, weak demand from major downstream industries such as construction and automobiles, and intensifying competition from low-cost Chinese steel, South Korean steelmakers are implementing large-scale production cuts and shutting down facilities. The prospect of additional U.S. trade barriers is adding further strain. Last year, Posco, a major South Korean steel manufacturer, shut down its Unit 1 wire rod mill at its Pohang plant and put its Chinese stainless steel production subsidiary up for sale. Hyundai Steel also suspended operations at some production sites in Pohang and Dangjin due to weak demand and labor strikes.
Amid growing concerns, South Korea’s government convened a strategy meeting on Feb. 5, chaired by acting President Choi Sang-mok, bringing together representatives from the steel, automotive, and other key industries. Discussions reportedly focused on industry conditions and negotiation strategies for engaging with U.S. officials.
Trump has directed his advisers to compile a comprehensive report on trade and tariffs by Apr. 1, with industry experts expecting details on potential steel tariffs to emerge around that time. Possible measures include reducing the existing duty-free quota or imposing either blanket or product-specific tariffs. During his first term, Trump implemented a 24% global tariff on steel, while South Korean steel faced a steeper 53% duty—at the time, the third-largest exporter to the U.S. Following negotiations, South Korea secured a tariff-free quota allowing it to export 70% of its average shipments over the previous three years, capped at 2.63 million tonnes annually, a system still in effect.
The U.S. remains a crucial market for South Korean steel. In 2023, it was South Korea’s third-largest steel export destination by volume (9.8%) and the largest by value (12.4%). According to the Korea Iron and Steel Association, while Japan and India surpassed South Korea in total export volume to the U.S., South Korean steel commands a higher value as it excludes lower-cost Chinese imports. The American Iron and Steel Institute ranked South Korea as the fourth-largest steel exporter to the U.S. last year, following Canada, Brazil, and Mexico.
Industry officials warn that reducing the duty-free quota or imposing tariffs could disrupt supplies of high-value steel products used by South Korean firms operating in the U.S., including Samsung, Hyundai Motor, and LG, as well as local manufacturers. Much of the steel shipped to the U.S. supports sectors such as automotive and electronics manufacturing. Some analysts also fear that Washington’s trade restrictions on China could lead to an influx of low-cost Chinese steel into South Korea. A steel industry official noted that China currently exports around 500,000 metric tons of steel to the U.S., and much of that volume could be redirected to South Korea, Japan, or other markets with fewer trade barriers.
Amid uncertainties, South Korean steelmakers are considering establishing production facilities in the U.S. to mitigate trade risks. By doing so, they aim to appeal to Trump, who has championed efforts to revitalize U.S. Steel, with a politically favorable “investment gift” while strengthening their foothold in the U.S. market.
Hyundai Steel is planning a multitrillion-won investment to build its first steel mill in the U.S., with Louisiana emerging as a leading candidate. The company also hopes to create synergies with Hyundai Motor’s expansion of automobile production in the U.S. Meanwhile, SeAH Steel, which already operates manufacturing facilities in the U.S., is considering expanding its footprint, and Posco is exploring the possibility of establishing a new local production base.
The South Korean steel industry is emphasizing its role in supplying essential materials for key U.S. industries, including energy, automobiles, batteries, and home appliances. Industry representatives argue that expanding South Korea’s steel quota could help meet U.S. infrastructure demands, particularly if Washington eases regulations on fossil fuel production, which would increase demand for energy-related steel pipes. Domestic supply of these pipes in the U.S. currently falls short, with annual consumption at 4.03 million tonnes and local production at just 2.76 million metric tons. Raising South Korea’s existing quota of 460,000 metric tonnes could help bridge this gap.
A steel industry official also highlighted South Korea’s contributions to U.S. national security. Hanwha Ocean’s acquisition of the Philadelphia Shipyard and Trump’s previous calls for support from South Korean shipbuilders could provide an opening for South Korean thick steel plates (6 mm or more in thickness) to be used in U.S. naval vessels, strengthening defense ties between the two nations.
