In April this year, the Donald Trump administration decided to impose a retaliatory tariff of 76% on Nexteel, Korea’s No. 1 exporter of oil country tubular goods (OCTG) to the United States, ignoring the 46.37% tariff determined in its own preliminary ruling. The news jolted the entire South Korean steel industry.
These days, the target is Hyundai Steel. During the recent investigation by the U.S. Department of Commerce regarding hot-rolled steel sheets imported from South Korea, American steel companies claimed that Hyundai Steel received tax incentives and R&D assistance under Korea’s Corporate Vitality Enhancement Act, which can be regarded as government subsidies and, as such, a retaliatory tariff should be imposed on the company.
In response, Hyundai Steel asserts that the American steel companies’ claim is ill-founded because its request for benefits under the act was made in November 2016, while the US Commerce Department’s investigation covered products imported from August to December 2016. Hyundai Steel’s argument is that the American steel companies failed to take into account the fact that it took time for Hyundai Steel to actually get benefits. Nonetheless, the Department of Commerce initiated an additional investigation in response to the American companies’ claims.
Under the circumstances, South Korean steel companies’ concerns are growing. As they have few ways to deal with the adverse attitudes of the department, they would have to grin and bear it to avoid further penalties.