Shares in South Korean and Vietnamese steelmakers, major Asian exporters of the metal to the United States, were down on Monday following the recent announcement of U.S. President Donald Trump that he would double tariffs on imported steel and aluminum to 50%.
Trump announced on Friday the new steel and aluminum 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 U.S., 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 to minimize the impact on industry.
South Korea was the fourth-biggest exporter of steel to the U.S. 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 U.S. rose 12% in April from a year earlier, according to trade data.
Steel and aluminum tariffs were among the earliest that Trump imposed when he returned to office in January. The tariffs of 25% on most steel and aluminum 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 dealt a severe blow to European industry.
South Korea, a major U.S. ally, has called for an exemption from tariffs on steel, autos and other items during talks with the U.S.
Seoul agreed in late April to craft a trade package by the end of the 90-day pause on Trump's reciprocal tariffs in July, but it has been difficult for negotiators to make big decisions due to a political leadership vacuum ahead of elections on Tuesday.
In late March, Hyundai Steel announced a plan to build a $5.8 billion factory in Louisiana in response to U.S. tariffs, but the factory will not open until 2029. In April, Hyundai Steel's bigger rival, POSCO, signed a preliminary deal to make an equity investment in the factory project.
In India, which relies heavily on the U.S. for aluminium exports, industry experts also warned of a major hit.
"This is going to have a detrimental impact," B.K. Bhatia, director-general at the Federation of Indian Mineral Industries, the country's leading mining body, told Reuters.
"The U.S. is the biggest market for Indian aluminium. Government has been negotiating, so we are hopeful that with talks, the tariffs will come down."
The U.S. is the world's largest steel importer, excluding the European Union, with 26.2 million tons of imported steel in 2024, according to the Department of Commerce. As a result, the new tariffs will likely increase steel prices across the board, hitting industry and consumers alike.
"The latest hike will prompt these sellers to renegotiate with their U.S. buyers on how to and who will shoulder the extra 25% cost," said Thaiseer Jaffar, founder of Dubai-based steel industry event organizer Global Steel Summit.
