The US Department of Commerce proposed to President Trump that Korean-made steel products should be included in steel products from 12 countries to be subject to a 53-percent tariff in the results of an investigation into import steel by Article 232 of the Trade Expansion Act released on February 16 (local time). This provision imposes a high rate tariff due to national security reasons and will inevitably hamstring Korean steel exporters.
According to a repot on the results of an investigation into import steel products by Article 232 of the Trade Expansion Act on February 18, the US Department of Commerce concluded that the US steel industry languished due to excessive steel imports may subvert national security by causing the US economy to deteriorate. The report said that the US steel industry should raise its average utilization rate of 74% from 2011 to 2016 to more than 80% to boost its competitiveness.
The Department of Commerce proposed three import regulation measures to President Trump, predicting that a 37-percent cut in steel imports would raise the US steel industry's utilization rate to more than 80%. President Trump will make the final decision based on the report by April 11.
The report included three measures –- slapping a 24-percent duty on all steel imports, pruning steel import volume from all export countries 63 percent compared to 2016 and putting tariffs of up to 53 percent on steel imports from 12 countries including Korea, China, Brazil and Vietnam. The Commerce Department did not open criteria for the selection of the 12 countries.
Canada was not included in the list of the 12 countries even though Canada is the number one exporter of steel to Canada. Neither were Mexico, a neighbor of the US and American’s traditional allies such as Japan, Germany, Taiwan and the UK.
It is analyzed that as the Article 232-based investigation was aimed at China, the report included nations contributing to low-priced exports by the Chinese steel industry as nations subject to import regulation. The actual report pointed its finger to China's chronic global steel oversupply as a cause of weakening the US economy and analyzed that steel imports will not decline unless this issue is resolved.
US steelmakers claimed that Korean steelmakers made steel plates from China into steel pipes and dumped them into the US during the investigation. It is highly possible that this claim affected the US Department of Commerce's conclusion. President Trump will finally select one of the three proposed by the Department of Commerce by April 11.
"Korean steelmakers will stop exporting steel to the US if only 30-percent tariffs are imposed on their products. Some products will face tariffs of over 100%,” said an official in the Korean steel industry. “This will be a virtual death sentence to Korean-made steel to be exported to the US.”