Trump's tariffs on steel and aluminum: Mounting uncertainty
Published: 11 Feb. 2025, 00:00
U.S. President Donald Trump announced on Feb. 9 that his administration would impose a 25 percent tariff on all steel and aluminum products imported into the United States. Unlike targeted measures against specific countries, this marks the first universal tariff initiative of the second Trump administration. Additionally, a reciprocal tariff policy is expected to be announced, under which the United States would impose tariffs on imported goods equivalent to those levied on American products by foreign countries. As these trade measures take shape, the specter of a Trump-led global trade war is becoming increasingly tangible, amplifying uncertainties for Korea’s export-driven manufacturing sector and businesses.
Between January and November last year, Korea exported $4.7 billion worth of steel and $800 million worth of aluminum to the United States, ranking as the fifth-largest supplier of both products to the United States. The United States has already initiated or temporarily suspended tariff disputes with Canada, China and Mexico, its top three sources of steel and aluminum imports. Now, countries like Korea find themselves within the direct impact zone of Trump's new tariff measures. In 2018, during his first term, the Trump administration invoked Section 232 of the Trade Expansion Act to impose a 25 percent tariff on all steel imports under the pretext of national security. At the time, Korea secured an exemption by negotiating a quota, limiting its duty-free steel exports to 2.63 million tons — 70 percent of the average annual volume over the preceding three years. This exemption remains in place today.
The specifics of Trump's latest tariff plan have yet to be disclosed. However, his remark that "tariffs will make U.S. Steel a very successful company" suggests that he intends to use these measures as both a protective shield for domestic industries and a bargaining chip to attract foreign investment. The anticipated announcement of a reciprocal tariff policy adds to the unease. While the Korea-U.S. Free Trade Agreement(FTA) ensures that most Korean exports to the United States remain duty-free, Korea still ranks eighth among countries contributing to America’s trade deficit, making it vulnerable to potential tariff retaliation.
Another key concern is whether Trump’s tariff war will accelerate Korean manufacturers’ investment in U.S. production facilities — a trend that reached its peak under the Biden administration. While decisions on foreign direct investment should be left to businesses, based on local demand and global supply chain dynamics, Korea must also consider the domestic implications. With high-quality manufacturing jobs dwindling at home, policymakers cannot ignore the long-term impact of these shifting trade policies. The Korean government must actively engage with Washington to protect the interests of Korean firms that have invested in the United States, while also fostering a more business-friendly environment domestically.
While the prospect of bilateral trade negotiations with the United States presents a challenge, Korea must also brace for the broader contraction in global trade that a tariff war could bring. Both Korean businesses and the government must fasten their seat belts and prepare for heightened economic uncertainty triggered by Trump’s protectionist trade policies. In times of trade negotiations, political factions, government agencies and corporations must function as a unified front. Unfortunately, Korea’s leadership remains absent amid political turmoil, as partisan infighting over impeachment takes precedence over national interests. This political vacuum at such a critical juncture is cause for deep concern.
Translated using generative AI and edited by Korea JoongAng Daily staff.
Between January and November last year, Korea exported $4.7 billion worth of steel and $800 million worth of aluminum to the United States, ranking as the fifth-largest supplier of both products to the United States. The United States has already initiated or temporarily suspended tariff disputes with Canada, China and Mexico, its top three sources of steel and aluminum imports. Now, countries like Korea find themselves within the direct impact zone of Trump's new tariff measures. In 2018, during his first term, the Trump administration invoked Section 232 of the Trade Expansion Act to impose a 25 percent tariff on all steel imports under the pretext of national security. At the time, Korea secured an exemption by negotiating a quota, limiting its duty-free steel exports to 2.63 million tons — 70 percent of the average annual volume over the preceding three years. This exemption remains in place today.
The specifics of Trump's latest tariff plan have yet to be disclosed. However, his remark that "tariffs will make U.S. Steel a very successful company" suggests that he intends to use these measures as both a protective shield for domestic industries and a bargaining chip to attract foreign investment. The anticipated announcement of a reciprocal tariff policy adds to the unease. While the Korea-U.S. Free Trade Agreement(FTA) ensures that most Korean exports to the United States remain duty-free, Korea still ranks eighth among countries contributing to America’s trade deficit, making it vulnerable to potential tariff retaliation.
Another key concern is whether Trump’s tariff war will accelerate Korean manufacturers’ investment in U.S. production facilities — a trend that reached its peak under the Biden administration. While decisions on foreign direct investment should be left to businesses, based on local demand and global supply chain dynamics, Korea must also consider the domestic implications. With high-quality manufacturing jobs dwindling at home, policymakers cannot ignore the long-term impact of these shifting trade policies. The Korean government must actively engage with Washington to protect the interests of Korean firms that have invested in the United States, while also fostering a more business-friendly environment domestically.
While the prospect of bilateral trade negotiations with the United States presents a challenge, Korea must also brace for the broader contraction in global trade that a tariff war could bring. Both Korean businesses and the government must fasten their seat belts and prepare for heightened economic uncertainty triggered by Trump’s protectionist trade policies. In times of trade negotiations, political factions, government agencies and corporations must function as a unified front. Unfortunately, Korea’s leadership remains absent amid political turmoil, as partisan infighting over impeachment takes precedence over national interests. This political vacuum at such a critical juncture is cause for deep concern.
Translated using generative AI and edited by Korea JoongAng Daily staff.
with the Korea JoongAng Daily
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