New Tariff Rate Quotas Threaten Korean Steel Export Competitiveness

With both the United States and Canada expanding steel tariffs, the North American investment plans of POSCO Group and Hyundai Steel have accelerated.

SEATTLE (Scrap Monster): Canada’s decision to strengthen tariff barriers to protect its domestic steel industry amid a trade war with the United States has increased the likelihood that some of Korea’s steel products will be caught in the crossfire. The difficulties are expected to persist as this stems from the impact of high tariffs imposed by U.S. President Donald Trump targeting Canada.

According to Bloomberg and other foreign media outlets, Canadian Prime Minister Mark Carney held a press conference on Nov. 26 (local time) and announced steel industry protection measures that lower the criteria for applying steel tariff rate quota (TRQ). TRQ is a system that exempts or applies low tariffs up to a certain volume based on a reference year, but imposes high tariffs on volumes exceeding this threshold.

Canada has already established TRQ application criteria of 50% for non-trade agreement countries and 100% for trade agreement signatory countries including Korea, based on 2024 import volumes, and is imposing 50% high tariffs on export products exceeding these thresholds. Through this measure, the TRQ application criteria for trade agreement signatory countries including Korea, which has an FTA, has been lowered again from the current 100% to 75%. Consequently, Korean steel products will face 50% tariffs on volumes exceeding 75% of last year’s export quantity. This means some Korean steel products that were tariff-free under the Korea-Canada FTA will now face 50% high tariffs.

According to the Korea International Trade Association (KITA), Korea exported approximately 620,000 tons of steel products worth $780 million to Canada last year, making it Korea's 14th largest steel export destination by volume. A steel industry insider stated, “We will need to wait for follow-up measures to accurately assess the impact,” adding, “Following the United States, Canada has also raised tariff barriers, making our response even more challenging.”

With both the United States and Canada expanding steel tariffs, the North American investment plans of POSCO Group and Hyundai Steel have accelerated. Hyundai Steel and POSCO Group have decided to invest $5.8 billion in Louisiana to build an integrated electric arc furnace steel mill. POSCO Holdings is also known to be pursuing strategic partnership and equity investment with Cleveland-Cliffs, one of the largest steel companies in the United States.

Courtesy: www.businesskorea.co.kr