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Heavier US Tariffs Prompting Korean Firms to Relocate Production Lines to US
Plant Relocation to the US
Heavier US Tariffs Prompting Korean Firms to Relocate Production Lines to US
  • By Jung Min-hee
  • August 8, 2018, 11:48
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Korean companies that have no other way for them to respond to the US Commerce Department,are brooding over moving their production lines to the US.
Korean companies that have been slapped with heavy tariffs from the Us are brooding over moving their production lines to the US.

In March, the US Commerce Department imposed a 60.81-percent retaliatory tariff on large-sized transformers exported by Hyundai Electric, an affiliate of the Hyundai Heavy Industries Group, saying the factual information submitted by the company was inadequate. "We could not know what information they wanted regarding the numerous items incorporated in a transformer," said a high-ranking official of the Hyundai Heavy Industries Group. “Once we submitted factual information, the US Commerce Department did not bother to say whether the information we had submitted was what they wanted; it simply levied a high-percent tariff.

Hyundai Electric is not the only Korean company that abandoned domestic production after being fed up with the US Commerce Department finding faults with its products. Nexsteel, Korea's No. 1 exporter of oil country tubular goods (OCTGs), is moving to build a factory in the US to relocate some of its production lines. The US Department of Commerce imposed a 75.81-percent anti-dumping duty on its products in April, saying "Nexsteel did not provide important information and delayed the investigation process." In the steel industry, experts say that Nexsteel's exports to the US are virtually over.

Nexsteel has been embarrassed. According to the company, the US Commerce Department made a big thing of the phrase "tariff mortgage of the US Customs." Nexsteel’s translation service agency omitted “the US Customs” in its translation. A company official said, "It was useless to submit a confirmation document of the translation company that it did not intentionally omit ‘the US Customs’ but did not include the phrase in its translation simply because the meaning was the same without it." The Commerce Department claimed that they could not trust the rest of the information that Nexsteel had submitted due to this translation error.

Korean companies brooding over moving their production lines to the US say that there is no other way for them. One possible way for them is to take their cases to the International Trade Court (CIT), which is an administrative court in the United States, in the hopes for a recalculation of the tariffs.

However, as the Commerce Department reassigns retaliatory tariffs annually, it is likely that the department will impose a high tariff again through a ruling the next year. "If the protectionist trend stops in a year or two, we don’t need to worry about it this much," a manufacturing industry official said. "We do not know until when the US will maintain this kind of protectionist posture so there is a high degree of uncertainty in manufacturing products in Korea and exporting them to the US."