Due to Steel Export Quota
The South Korean steel pipe industry which has been increasing exports with a growing demand for steel pipes in the United States hit an unexpected snag. It has been exempted from Washington’s additional 25 percent tariff on steel products but the volume of exports to the U.S. is expected to halve.
In particular, the demand for steel pipes in the U.S. market is expected to surge as U.S. President Donald Trump pledged to make a large-scale infrastructure investment worth US$1.5 trillion (1,611 trillion won). However, the domestic steel industry, which faces an export quota, have no choice but to sit on its hands.
According to the government and industry sources on March 27, the volume of South Korea’s steel pipe exports to the U.S. cannot surpass 1.04 million tons under an agreement between South Korea and the U.S. announced on the 26th. The figure is only 51 percent of its exports last year. An official from the Ministry of Trade, Industry and Energy said, “A quota is different from a tariff rate quota which are two-level tariffs, with a limited volume of imports permitted at the lower “in-quota” tariff and all subsequent imports charged the higher “out-of- quota” tariff. South Korea can only export a quota portion.”
South Korean steel pipe producers have been increasing the amount of exports as the demand for shale gas development and infrastructure construction has risen in the U.S. They were able to offset retaliatory tariffs imposed by the U.S. two years ago with a strong demand in the market.
In fact, the total amount of steel exports to the U.S. decreased from 4.4 million tons in 2015 to 3.4 million tons last year but that of steel pipes nearly doubled to 2.03 million tons over the same period. As the demand for steel pipes in the U.S. is expected to skyrocket due to President Trump’s large-scale infrastructure investment plans, South Korea is facing an even bigger setback.