Steelmakers in South Korea, Vietnam Tumble on Trump's New Tariffs

SEATTLE (Scrap Monster): Shares in South Korean and Vietnamese steelmakers, major Asian exporters of the metal to the United States, dropped on Monday after U.S. President Donald Trump said he would double tariffs on imported steel and aluminium to 50%.

Trump announced on Friday the new steel and aluminium levies, which take effect on June 4, intensifying a global trade war just hours after he accused China of violating an agreement with the U.S. to mutually roll back tariffs and trade restrictions for critical minerals.

Steel industry experts said that while the increased tariff would cause significant disruption for major exporters to the United States, the rates could go down in light of some of Trump's trade policy reversals.

"Frequent shifts in the Trump administration's tariff policies introduce considerable uncertainty regarding the actual impact ... I think the final result will be far lower than initially projected, especially concerning its duration," said Chelsea Ye, senior analyst at metals research firm McCloskey.

South Korea's Industry Ministry said on Monday it would respond to the 50% tariff on steel products as part of its trade discussions with Washington in order to minimise the impact on industry.

South Korea was the fourth-biggest exporter of steel to the United States last year, behind Canada, Mexico and Brazil, according to American Iron and Steel Institute data.

South Korea's Industry Ministry said in a statement that it had held an emergency meeting with officials from the country's major steelmakers, including POSCO and Hyundai Steel.

Shares of South Korean steelmakers lost ground on Monday, with POSCO and Hyundai Steel falling 3% and SeAH Steel Corp down 8%.

In Vietnam, major steelmakers Hoa Sen Group and Nam Kim Steel fell 2.8% and 3.4% respectively. Vietnam Steel Corp also fell 2.7%.

Vietnam's exports of steel and steel products to the U.S. fell 27% in the first four months of this year, government data showed.

The 50% tariffs will add to the challenges facing Korean steel exporters, which have refrained from sharply boosting exports to the U.S. to avoid Washington's scrutiny, despite rising U.S. steel prices, an industry executive told Reuters.

"It will be a burden to exporting companies if there are no additional steel price increases in the U.S," he told Reuters, asking not to be identified due to the sensitivity of the issue.

Despite tariffs, South Korea's steel shipments to the United States rose 12% in April from a year earlier, according to trade data.

Steel and aluminium tariffs were among the earliest Trump imposed when he returned to office in January. The tariffs of 25% on most steel and aluminium imported to the U.S. went into effect on March 12.

Industry officials said the tariffs had increased U.S. steel prices, affecting several sectors, including home appliances, cars, and construction.

In Europe, Germany's second-biggest steelmaker Salzgitter warned that Washington's tariff policy was dealing a severe blow to European industry.

Courtesy: www.reuters.com