Starting Today, 25% Steel Tariffs... Breakthrough for High-Value, High-Margin Products

Products Once Hindered by Quotas Now Find Opportunity
High-Manganese Steel, Resistant to Extreme Cold and Corrosion, Suited for Alaska Project
Profit Margin Adjustments Expected for Steel Pipes and Hot-Rolled Steel
Changes Anticipated in Steel Export Items to the U.S.

The 25% tariffs on steel and aluminum imposed by the second Trump administration will take effect from 1 p.m. Korean time on the 12th. The 2.63 million ton duty-free quota, which has been in place since 2018, will disappear, and the domestic steel industry will supply the U.S. market with a 25% tariff applied to exports. There are hopeful expectations that this will help expand the market for high value-added and high-margin products such as high-manganese steel.

According to the industry, despite the 25% tariff, the abolition of the quota system is expected to open sales channels for some high value-added products that could not be exported before. The item drawing immediate attention is high-manganese steel. High-manganese steel is a special alloy steel that can withstand ultra-low temperatures of minus 163 degrees Celsius and is resistant to wear and corrosion. It was first developed in the world by POSCO in 2013. It is characterized by significantly increasing the manganese content instead of the expensive base material nickel. It has the same performance as nickel-aluminum alloy steel but is about 30% cheaper. High-manganese steel was a product that could not be exported to the U.S. due to quota restrictions. It is known to have been supplied only to some North American regions such as Canada.

This product is gaining attention because it is suitable for the natural gas projects promoted by the Trump administration. President Trump has emphasized the "Alaska Natural Gas Project." For development, equipment related to liquefied natural gas (LNG) plants such as pipes and fittings (components used in piping systems), as well as LNG vessels, are required. Domestic steel companies have global competitiveness in LNG-grade high-quality steel technology and production capacity that can withstand the ultra-low temperature environment (minus 40 degrees Celsius year-round) of the Alaska LNG project. Demand for steel materials used for liquefied natural gas storage and transportation is expected to increase.

With the imposition of tariffs, demand for low-priced products is expected to decrease, leading to changes in steel export items to the U.S. Under the quota system, the most exported item was steel pipes (1.09 million tons), followed by hot-rolled steel sheets (500,000 tons), heavy plates (190,000 tons), and color steel sheets (150,000 tons). An industry official explained, "Existing export items may have their supply adjusted according to profit margins. For example, if a product priced at 100,000 won is subject to a 25% tariff, it can be offered at 130,000 won, but if the U.S. local customer says it is too expensive and refuses to buy, it results in a loss for us, making export impossible." He added, "The supply of high value-added and high-margin products, which had been restricted due to the quota, may increase."

However, there are also concerns that profitability will decline due to deteriorating price competitiveness following the abolition of the duty-free quota. As demand for products from U.S. companies like US Steel, whose price competitiveness has increased due to tariffs, grows, overall steel imports into the U.S. may decrease. There is also speculation that Nippon Steel, which has been pursuing the acquisition of US Steel, might take the place of Korean steel products that are pushed out.

The domestic steel industry has been seeking response strategies together with trade authorities considering this situation. The authorities reportedly urged the industry to "avoid rapid export increases." The industry is also closely monitoring the application of tariffs on existing order volumes. Discussions have been held on how to bear the increased tariff costs for shipments ordered by U.S. importers but not cleared through customs by 1 p.m. on the 12th. An industry official said, "Trade policy is not an area that a single company can solve alone," adding, "We plan to collaborate with government ministries to resolve issues for the national interest."

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