Japan Retains 50% Steel Tariff Despite U.S. Negotiations
Reporter Ryu In-seon = Japan has maintained the 50% tariff on steel while reaching a tariff negotiation with the United States. The Korean steel industry, which had hoped for the revival of a ‘quota system’ that would limit export volumes but eliminate tariffs, sees the Korea-U.S. steel tariff negotiations as being at a ‘standstill.’According to industry sources on the 23rd, the U.S. and Japanese governments reduced the item-specific tariff on automobiles from 25% to 15% (15% including existing tariffs), but kept the 50% tariff applied to steel unchanged.
U.S.-Japan Deal Seen as Strategic Move Targeting Rust Belt Voters
In light of the outcome of the negotiations between the U.S. and Japan, interpretations suggest that President Trump targeted the white male workers in the ‘Rust Belt.’ Trump maintained a policy of imposing high tariffs on imports to boost the steel production rates, which are symbolic of traditional manufacturing industries. Japan was expected to play a ‘barometer’ role in South Korea’s negotiations with the U.S. due to its significant export share in steel and automobiles, as well as being a traditional ally of the U.S.
The U.S. also had similar demands regarding investments in liquefied natural gas (LNG). Japan decided to establish a joint venture (JV) in Alaska for this purpose. However, Japan ultimately only reduced automobile tariffs.
Korean Steel Industry Faces Challenges Under Heavy Tariff Regime
The Korean steel industry analyzes that if the U.S. maintains a high 50% steel tariff, alarm bells have been triggered for export strategies. After steel tariffs were raised from 25% to 50%, price competitiveness within the U.S. has significantly declined.
The existing quota of 2.63 million tons is also a burden for South Korea as it acts as an ‘upper limit.’ While the duty-free quota has been abolished, the steel industry views the 2.63 million tons as an implicit red line.
With the tariff burden heightening again, there is a growing sentiment in the steel industry that ‘it would be good to negotiate for low-tariff benefits even if the quota volume is reduced.’ This is because the demand for high-value-added steel, which South Korea primarily exports, remains steady in the U.S.
Among major steel-producing countries, there were expectations that Mexico could agree to the quota system, but currently, even these expectations have sunk below the surface. Japan also failed to lower steel tariffs, and so far, only the United Kingdom, which is not a major steel producer, has agreed to the quota system.
South Korea Pursues Diplomatic Efforts Amid Tariff Pressure
An industry official said, ‘If a 50% tariff on general steel products is maintained, we will lose competitiveness in the U.S. market,’ adding, ‘It is inevitable that the profitability of high-value-added specialty products will also deteriorate.’ Meanwhile, the government is currently sending Minister of Trade, Industry and Energy Kim Jong-kwan and National Security Office Director Wi Seong-lak to the United States to conduct tariff negotiations. It is reported that they are also considering a ‘package deal’ to reach conclusions together in economic cooperation and security areas.
