"US Recommends Using Only American Steel for Infrastructure Construction... Could It Be a Negative Factor for Korea?"

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina, Reporter Oh Hyung-gil] The Joe Biden administration in the United States plans to recommend that only American-made steel and components be used in infrastructure construction within the U.S. Unlike the European Union (EU), Japan, and others, which have renegotiated steel quota (allocation) systems, concerns are rising that if this measure is implemented, the export routes for Korean steel companies to the U.S. could become even more restricted.

On the 18th (local time), the Associated Press reported that President Biden will announce a recommendation allowing spending only on American-made materials related to the $1 trillion (approximately 1,235 trillion KRW) infrastructure support budget. However, if the materials are not produced in the U.S. or the supply is insufficient, and prices are excessively high causing a burden on construction, the use of foreign-produced goods will be limitedly permitted.

This is part of President Biden’s efforts to revitalize American manufacturing since taking office. From the beginning of his term, Biden declared the revival of manufacturing as a fundamental solution to alleviate supply chain disruptions and inflation, and has been working to reduce external dependence. On the 14th, in Greensboro, North Carolina, he said, "Every action I have taken to rebuild the U.S. economy has been based on one principle: ‘Made in America.’"

The domestic steel industry is concerned that this measure will make it more difficult to secure new markets rather than causing direct damage. There are calls to expedite renegotiations of the Trade Expansion Act Section 232, which governs the quota system with the U.S. government.

A representative from the Korea Iron & Steel Association said, "Since none of our steel products are directly supplied to U.S. government infrastructure construction, we expect no significant damage," adding, "This measure appears aimed at increasing the market share of American-made steel." A steel industry official also predicted, "Sales within the quota will continue," but noted, "There will be difficulties in securing additional sales channels."

Earlier, the U.S. Congress bipartisanly passed the infrastructure bill in November last year, stipulating that from May 14, all steel and building materials used in federal government infrastructure projects must be American-made.

Meanwhile, Korea accepted a quota system limiting exports to 70% of the average volume of finished steel products from 2015 to 2017 as a way to avoid high tariffs during the Donald Trump administration in 2018. The annual average export volume of Korean steel products to the U.S., which had reached 3.83 million tons, sharply dropped to around 2.63 million tons. Currently, the Korean government has proposed renegotiating the quota system with the U.S., but the possibility of renegotiation remains slim.

This content was produced with the assistance of AI translation services.