South Korea Seeks Tariffs on Chinese Steel Imports Amid Industry Concerns

Government moves to protect domestic steel producers from cheaper competition

South Korea is poised to introduce tariffs on specific imports of Chinese steel, reflecting concerns over an influx of lower-priced products undermining its domestic industry. This initiative follows similar actions taken by the Trump administration, which previously imposed tariffs on steel and aluminum products. According to the South Korean trade ministry, the move aims to protect local steelmakers from the adverse effects of cheap foreign competition, which has significantly impacted their operations.

The trade ministry's statement indicated that a preliminary investigation revealed the detrimental effects of cheaper steel on South Korea's steel sector. The government is targeting a provisional tariff of up to 38.02% on hot-rolled steel plates imported from China. In addition, it seeks to impose tariffs of nearly 28% on Baoshan Iron & Steel Co. and approximately 38% on various suppliers, including Hunan Valin Xiangtang Iron and Steel Co.

The investigation was initiated last October, following a request from Hyundai Steel Co., which highlighted the challenges posed by the influx of inexpensive steel products from China and Japan. The levies will be enforced once approved by the finance ministry. The potential tariffs have already caused a significant uptick in Hyundai Steel's stock, which surged by as much as 10% in intraday trading, marking its largest gain since December. Other South Korean steel manufacturers, such as Posco Holdings, also experienced stock price increases, while Baoshan Iron & Steel saw a decline in Shanghai.

China's steel production has been under pressure due to a prolonged property crisis that has reduced domestic demand. Despite this, the country continues to produce excess steel, leading to a surge in exports, which reached a nine-year high last year. This scenario has exacerbated competition for South Korean producers, who are grappling with the impacts of low-priced imports.

Earlier this month, President Trump enforced a 25% tariff on all U.S. imports of steel and aluminum, citing the need to address efforts by nations, particularly China, to circumvent existing duties. This decision followed the implementation of a 10% tariff on all Chinese imports, underscoring a broader strategy to safeguard domestic industries from foreign competition.

Hyundai Steel has publicly stated that its operations have suffered due to the influx of hot-rolled steel plates from China and Japan, which led the company to file a formal complaint with the government. The presence of low-priced Chinese steel products also contributed to Posco Holdings' decision to shut down its No. 1 wire rod plant in Pohang, highlighting the significant challenges faced by South Korean steelmakers in maintaining their market position amidst increasing competition from abroad.