AsianFin -- The new South Korea’s administration is requesting tariff exemptions during its first trade talks with the United States as the major Asian economy suffers double-digit plunge in steel exports to U.S. due to the hefy tariffs.
Credit：South Korea's Ministry of Trade, Industry and Energy
South Korea reiterated its request for exemptions from all U.S.reciprocal tariffs and specific tariffs affecting key sectors such as steel and automobiles during the first high-level talks with Washington under the new administration of President Lee Jae Myung, the Minister for Trade Yeo Han-koo said Tuesday.
Yeo on Sunday started his first trip to Washington D.C. since taking office ministerial-level Korea-U.S. consultations with key U.S. officials for discussions on U.S. tariff measures and mutually beneficial solutions, according to a statement of South Korea’s Ministry of Trade, Industry and Energy (MOTIE). The ministry said Yeo met with Secretary of Commerce Howard Lutnick and U.S. Trade Representative Jamieson Greer on Monday.
Both parties reaffirmed their commitment to swiftly reaching a mutually beneficial agreement, but didn’t provide a timeline. During the meeting, Yeo "emphasized the importance of gaining exemption from reciprocal tariffs and product tariffs, such as automobiles and steel, and reaffirmed the will of both sides to reach a mutually beneficial agreement as soon as possible," the MOTIE said in a press release.
Yeo, the top trade negotiator, told the U.S. counterparts that trade talks had been limited owing to the political turmoil and a leadership vacuum in South Korea over the past months, and now that the new administration, which took office earlier this month, has secured democratic legitimacy and mandate, “there is an opportunity to advance full-scale negotiations”, according to the MOTIE.
Besides tariffs, Yeo stressed the ongoing negotiations also aim to boost strategic cooperation across various manufacturing sectors. Both sides will work to establish a new framework for the manufacturing partnership since industrial supply chains of the two countries are interwined. Yeo also conveyed South Korean industry’s concerns about U.S. export control policy as the Trump administration has been tightening restrictions on high-tech exports to China.
Recent statistics highlighted how South Korea’s export-reliant economy has been severely shocked by U.S. President Donald Trump’s levies. South Korea’s steel exports to the U.S. in May tumbled 16.3% to $327 million from $390 million a year ago, and export unit price fall 9.4% year-over-year (YoY) to $1,295 per ton, according to the Korea International Trade Association (KITA).
"U.S. steel tariffs appear to have begun affecting Korean steel shipments in May, as domestic steelmakers lowered their export prices last month to maintain a certain level of exports to the U.S.," a KITA official said.
South Korea is the fourth-biggest exporter of steel to the United States, behind Canada, Mexico and Brazil last year, according to American Iron and Steel Institute data. The new U.S. steel tariffs effective this month are set to add challenge to Korean exporters which have refrained from sharply expanding exports to the U.S. avoid Washington scrutiny, depsite rising U.S. steel prices, an industry executive told Reuters earlier this month.
Trump earlier this month signed a proclamation to raised tariffs on steel and aluminum imports into the country to 50% from 25%, taking into effect on June 4. The new tariffs apply to imports from all the U.S. trading partners except Britain.
This is the second time that Trump hiked tariffs on steel and aluminum imports in nearly three months. The president on February 10 signed an order to impose 25% steel and aluminum tariffs starting March 12. He in the meantime removed the exemptions from his 2018 tariffs on steel, meaning that all steel imports should be taxed at a minimum of 25%, and also raises his 2018 aluminum tariffs from 10% to 25%.
South Korea’s industry officials expect the higher tariffs will have a greater impact on Korean steelmakers in the second half of the year. The increased rates are likely to make Korean steel products less competitive in the U.S. market and local clients may turn to more price-competitive suppliers, they said.
