Late last month, the United States Department of Commerce imposed a preliminary anti-dumping duty of 40.8% on carbon and alloy steel wire rods imported from South Korea, almost quadrupling the tariff rate in just about one month. Last year, South Korea exported carbon and alloy steel wire rods worth US$45.6 million in total to the United States.
The Department of Commerce explained that there was an error during its first calculation. On November 1, the three American steelmakers including Charter Steel pointed out that the department compared wire rod prices not on a U.S. dollar basis but based on different currencies. The department restarted the process and came up with revised results late last month. The final duty is scheduled to be announced in January next year.
South Korean steelmakers are claiming that the change is too much despite the explanation. Until recently, the American steelmakers repeatedly asked the department to impose an anti-dumping duty of 33.96% to 43.25%, claiming that they suffered from South Korean companies’ dumping prices. “Although the department is mentioning an error, the decision is just yet another example of the Donald Trump administration’s protectionist trade policy,” said a local industry expert.
The news is particularly bitter for POSCO in that the company accounts for most of the carbon and alloy steel wire rod exports from South Korea to the U.S. POSCO opened a wire rod processing center in Indiana in September this year. However, the operation of the facility is likely to be affected as the high anti-dumping duty is looming large.
Another problem is that the U.S. government’s trade pressure on South Korean steelmakers is involved with negotiations for KORUS FTA revision. The U.S. government initiated an extensive anti-dumping investigation targeting South Korean steel products in the first half of this year, when South Korea and the U.S. were in a tug of war over KORUS FTA revision. “The U.S. is putting pressure on a variety of items such as photovoltaic panels and washing machines ahead of the revision,” said an industry insider, adding, “The pressure on the steel industry shares the same purpose.”