Seoul, April 2 South Korean steelmakers are bracing for US President Donald Trump's sweeping tariffs with possible plans to build production facilities in the United States, industry officials and market observers said on Wednesday.
Trump has announced a wide range of levies on some of his country's trading partners since taking office in January.
On top of 25 per cent tariffs on steel and aluminium imports that kicked off in mid-March, his government is set to roll out country-specific reciprocal tariffs on Wednesday (U.S. time) against "all countries.”
In response to the steep tariffs, the country's two major steelmakers, POSCO Holdings and Hyundai Steel, have come up with plans to build steel plants in the US, the experts said, reports Yonhap news agency.
Hyundai Steel recently announced it will invest $5.8 billion to build an electric arc furnace-based integrated steel mill in Louisiana by 2029, with an aim to start production in the same year.
The 2.7 million-ton-a-year plant is expected to supply U.S.-produced steel not only for its affiliates Hyundai Motor and Kia but also for other automakers operating in the world's most important automobile market.
"We will supply automotive steel for Hyundai and Kia's U.S.-made strategic vehicles, while also exploring supply deals with carmakers in Latin America and Europe," a Hyundai Steel official said. If built, the Louisiana plant will be the company's first overseas steel production facility.
Hyundai Steel's plant project is part of parent Hyundai Motor Group's broader $21 billion investment plan in the US that came in the face of Trump's escalating tariff policies.
Local industry leader POSCO said it has been reviewing investment plans for "upstream steel processes" in the U.S. and India.
In his recent message to employees, POSCO Group Chairman Chang In-hwa said, "With a sense of crisis that the company will fall behind if it does not do the urgent thing right now, it will have to make an investment in steel mills in fast-growing and highly profitable regions, such as the U.S. and India, for a meaningful outcome."
POSCO has yet to make a final decision on the U.S. plant. To ride out current challenges, POSCO will focus more on developing high-value-added products and enhancing its technological capabilities to cut manufacturing costs further to secure an "unrivalled" competitiveness in the global market, Chang has said.
In October, POSCO signed an initial pact with India's largest steelmaker, JSW Group, to jointly build a 5 million-ton-a-year integrated steel plant.
South Korea was the fourth-largest exporter of steel to the U.S. last year, accounting for 9 per cent, or $2.9 billion, of Washington's steel imports, according to data from the U.S. International Trade Administration (ITA). The country was also the fourth-biggest exporter of aluminium to the U.S., taking up about 4 percent of the U.S.' aluminium imports.
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