Acting President Choi Sang-mok announced on Tuesday that South Korea will seek negotiations with the United States over its decision to impose a 25% tariff on steel and aluminum imports. He emphasized the need to safeguard the interests of South Korean companies and stated that discussions would also be held with Japan and the European Union to coordinate a response.
Choi reiterated on Thursday that South Korea’s extensive investments in the U.S. should provide grounds for negotiation with President Donald Trump’s administration. His remarks follow Trump’s February 10 announcement of sweeping tariffs, set to take effect on March 12, which revoke previous exemptions. The move comes amid South Korea’s ongoing political uncertainty after the December 3 martial law declaration and the indictment of President Yoon Suk Yeol, complicating diplomatic efforts.
Acting President Choi Sang-mok stated that the South Korean government is making every effort to strengthen ties with the U.S. administration to safeguard the interests of its steel and aluminum exporters. Trade Minister Cheong In-kyo warned that the 25% tariff, set to take effect in March, could weaken U.S. demand for steel and reduce exporters’ profitability. However, he also noted that South Korean firms might explore alternative markets to counterbalance the impact.
Despite President Trump’s insistence that the tariff will be implemented “without exceptions or exemptions,” Cheong confirmed that South Korea would actively assess possibilities for negotiation. He addressed officials from the country’s steel sector in Seoul, emphasizing that past trade agreements, including the 2018 exemption deal, could provide a foundation for talks with the U.S. government. In 2018, South Korea secured a special quota allowing duty-free steel exports to 70% of its previous average shipments.
South Korea’s steel industry has already felt the pressure, with shares of major producers declining. POSCO Holdings recorded a 0.8% drop on Tuesday, while Dongkuk Steel Mill fell 0.9%, hitting a three-month low. Meanwhile, the broader KOSPI market climbed 0.7%. According to data from the American Iron and Steel Institute, South Korea remains one of the largest steel suppliers to the U.S., ranking fourth behind Canada, Mexico, and Brazil.
South Korea has been strengthening trade ties with other economies, including Canada, to counteract the potential economic strain. In December 2024, Seoul ramped up a record C$357.1 billion (360 trillion won) in trade financing to diversify export markets. Hyundai Motor has also expanded its global policy team to navigate the shifting trade landscape, bringing in former diplomats to manage negotiations more effectively.
Trade Minister Ahn Dukgeun has launched multiple diplomatic missions to Washington, while business leaders, led by the Korean Chamber of Commerce and Industry (KCCI), are planning a trade delegation visit to the U.S. in February. Analysts warn that South Korea’s C$94.3-billion trade surplus with the U.S. could make it a prime target for further tariffs, potentially reducing its GDP growth and weakening the Korean won. As part of its strategy, Seoul is increasing imports of American crude oil and natural gas to address trade imbalances while also highlighting its contributions to the U.S. economy, including job creation and investment.
Citi estimates that the newly proposed U.S. steel tariffs could reduce South Korea’s economic growth by 0.11% to 0.22% of GDP. Meanwhile, European Union trade ministers are set to hold an emergency video conference to discuss their response to the tariff measures, reflecting broader global concerns over rising trade restrictions. Last November, South Korea’s trade minister suggested that higher U.S. tariffs might lead domestic firms to expand investments in the United States, a move that could help mitigate trade tensions.
Trump’s return to office is expected to reshape South Korea’s industrial landscape, creating both opportunities and risks. Shipbuilders and energy firms may benefit if the U.S. prioritizes defense maintenance and fossil fuel projects. However, electric vehicle and battery manufacturers could face setbacks if subsidies or import advantages are revoked, while auto and semiconductor exports may encounter new tariffs. In response, companies like Hyundai Motor might shift toward hybrid vehicle production, and policymakers could explore deeper trade ties with Canada and other economies to secure alternative markets and energy sources.
