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U.S. Slaps 39% Tariff on Korean Oil Pipelines
Smaller Korean Steel Firms Hit Hard
U.S. Slaps 39% Tariff on Korean Oil Pipelines
  • By Jung Min-hee
  • July 31, 2019, 15:27
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The U.S. Department of Commer has more than doubled tariffs on Korean oil pipelines.

The United States has more than doubled tariffs on Korean oil pipelines. U.S. trade pressure is mounting on Korea as U.S. President Donald Trump is seeking to strip it of the developing country status in the World Trade Organization (WTO).

The U.S. Department of Commerce decided to impose a 38.87 percent tariff on products from Nexteel Co. at an annual review of anti-dumping duties on Korean oil pipelines, the Korean Ministry of Trade, Industry and Energy said on July 30. The percentage is more than twice as high as the highest tariff rate set during the previous year's review. Other steel companies including Hyundai Steel were hit by an anti-dumping duty rate of 29.89 percent, nearly double the 16.58 percent imposed on other steel companies last year. The rate for SeAH Steel was 22.70 percent.

The U.S. Department of Commerce revised some of the tariff rates calculated last month and announced the results on July 23.

The United States is a large market for steel pipe products such as oil pipelines as they are used to collect crude oil and shale gas. Last year, 35 percent of Korea’s steel pipe exports went to the United States. In the same period, Korean oil pipelines exported to the United States amounted to US$350 million.

Earlier, on July 15, President Trump signed an executive order that will raise the proportion of U.S. steel that must be used for federal infrastructure projects to 95 percent. Industry analysts say the impact of the new regulation on Korean steel makers is limited as more of their products are used in private projects rather than government projects. However, the Trump administration's higher tariffs on individual items will inevitably have a negative impact on Korean steel markers.

The U.S. Commerce Department cited the "particular market situation (PMS)" clause to justify its tariff adjustment. The PMS is a system through which the department arbitrarily imposes tariffs on imported products.

The final tariff rate of the second annual review announced on July 14 will apply to oil pipeline products exported to the United States after this date. So, it will apply to shipments exported before the final judgment of the third annual review. The U.S. Department of Commerce annually reviews each item on an annual basis and makes preliminary and final judgments.

The heightened tariffs put mid-sized Korean steel makers on alert as oil pipeline production is concentrated on mid-sized Korean steel companies rather than big Korean steelmakers such as POSCO and Hyundai Steel. The increasing U.S. steel trade pressure, together with Japan's export regulations, will weaken the competitiveness of Korea’s major industries.


The U.S. Court of International Trade (CIT) ruled earlier this year that high tariffs imposed on Korean steel pipes were unfair, but nonetheless, the U.S. Department of Commerce continues to raise tariffs. "Small and medium-sized Korean steelmakers will continue to suffer damage," an industry official said.