In a sweeping move to reshape the global steel trade, President Donald Trump’s administration has imposed a 25% tariff on all steel and aluminum imports, eliminating prior exemptions—including South Korea’s annual duty-free steel quota of 2.63 million metric tons. The measure, which took effect on March 12 at 1:01 p.m. Korea time, marks the first blanket tariff of Trump’s second administration.
Steel, often referred to as the “rice of industry,” is a key material for automobiles, shipbuilding, and home appliances. The tariff is intended to protect domestic producers like U.S. Steel while encouraging foreign steelmakers to establish operations within the United States, securing what Washington considers a strategic resource.
For years, China’s steel overcapacity has fueled global price volatility. Now, Beijing’s push to curb production could reshape market dynamics, potentially driving up steel prices in key export markets like South Korea and other Asian countries. The National Development and Reform Commission announced on March 5 at the National People’s Congress that it would limit steel output in 2025 and push for industry restructuring. Market analysts expect a production cut of around 50 million metric tons—more than 80% of South Korea’s 2024 crude steel output of 63.51 million tons and nearly half of China’s annual exports of 110.7 million tons.
South Korea—the world’s sixth-largest steel producer and fourth-largest steel exporter to the U.S.—is weighing the implications of the tariff and China’s supply shift. While South Korean steelmakers face higher costs and reduced competitiveness in the U.S. market, some industry players see potential benefits. Shares of major steel producers rose following the announcement, with POSCO Holdings gaining 5.9%, SeAh Steel Holdings up 4.9%, Dongkuk Steel rising 3.7%, and Hyundai Steel climbing 2.5%.
“With all competitors now facing the same 25% tariff, the playing field has been leveled,” a South Korean steel industry official said. “Since we were previously limited by a quota, this could be an opportunity to expand high-end steel exports to the U.S.”
Further benefits may arise if Canada and Mexico—ranked first and third among U.S. steel exporters—face a cumulative 50% tariff, including an additional 25% duty under broader U.S. trade policies. South Korean firms could gain a competitive edge in such a scenario.
However, U.S. producers, benefiting from tariff protection, may absorb market share previously held by foreign suppliers, including South Korea. “If U.S. steel prices continue to surge, Washington may introduce additional trade barriers to curb imports,” warned Park Hyun-wook, an analyst at Hyundai Motor Securities.
Small and midsize South Korean exporters are expected to bear the brunt of the new tariffs. The U.S. Commerce Department has expanded the 25% duty beyond raw steel and aluminum products to cover 253 derivative goods, including bolts, nuts, springs, auto parts, and appliance components. Companies that fail to prove the steel content in their exports could face duties on the total product value, a South Korean government official said.
At an emergency meeting hosted by the Korea Federation of SMEs and the Ministry of SMEs and Startups on March 12, industry leaders voiced concerns. “We were in the process of finalizing a $5 million export deal with a U.S. firm, but the tariff has complicated negotiations,” said Yoo Kyung-yeon, CEO of GJ Aluminium.
The Ministry of SMEs and Startups and the Ministry of Trade, Industry and Energy announced plans to provide emergency support for affected businesses.
