Gov’t sends envoy to argue against steel tariffs

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Gov’t sends envoy to argue against steel tariffs

Trade Minister Kim Hyun-chong left for Washington on Sunday where he will be meeting politicians and industry officials throughout the week in the hope of persuading U.S. President Donald Trump not to impose higher tariffs and an even stricter quota on Korean steel and aluminum imports.

Feb. 16 the U.S. Commerce Department released a report that recommended imposing a 53 percent tariff on steel imported from 12 countries including China and Korea as well as limiting the quota by 63 percent of the previous year’s imports under Section 232 of its Trade Expansion Act.

According to a Bloomberg report on Sunday, Trump is in favor of imposing a 24 percent tariff on all imported steels unilaterally, which he considers the most severe option, in addition to a 10 percent duty on aluminum imports.

The Korea Iron and Steel Association estimates Korean steel exports to the United States at $3.2 billion last year. This is nearly triple the size of washing machine exports to the United States, at roughly $1 billion in 2016, and more than double the $1.3 billion worth of solar energy modules exported to the U.S. in 2016.

This translates to a much bigger hit on Korean exported goods if the 53 percent tariff is imposed on steel.

The U.S. in January raised the tariffs on Korean washing machines as well as solar panels.

Kim is expected to reassure Washington officials on the indirect importing of Chinese steels through Korea.

Trump’s recent attacks on steel imports are largely believed to be targeted towards China, despite the country being ranked 11th for steel imports into the United States.

Korea ranks third, accounting for 9 percent of steel imported into the U.S. in 2017, after No. 1 Canada with 16 percent and Brazil with 13 percent.

In fact, in its report released a week ago the Commerce Department states that limiting imports is crucial for national defense.

“Domestic steel production is essential for national security applications. Statutory provisions illustrate that Congress believes domestic production capability is essential for defense requirement and critical infrastructure needs, and ultimately to the national security of the United States,” the report stated in its findings. “While U.S. steel production capacity has remained flat since 2001, other steel producing nations have increased their production capacity, with China alone able to produce as much steel as the rest of the world combined.”

As a result China and Korea were included among the 12 countries that could be subjected to a proposed 53 percent tariff while biggest importer Canada and other major importers such as Japan and Germany were left out.

It is thought that Korea was included in the list as Chinese steel companies enter the U.S. market indirectly through Korea.

The Korean trade minister is planning to explain that only 2.4 percent of the Korean steel that is exported to the U.S. has Chinese origins.

Kim’s goal is presumably to get Korea removed from the list of countries that could face a 53 percent tariff.

Kim is also expected to hold meetings to discuss the third renegotiation of the bilateral free trade agreement with the United States, which is expected to be held in Washington in March.

The first meeting was held in Washington while the second was held in Seoul earlier this month.

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