Seoul all out to counter US 25% tariff on steel imports

South Korea is making last-minute struggles this week to exempt itself from the US government’s impending steel tariff which would strike a heavy blow to steel producers here and the nation’s export-dependent economy.

Unlike other major steel exporting states such as China, Canada and the European Union, however, Seoul refrained from adopting reciprocal tariffication.

Trade Minister Kim Hyun-chong on Tuesday left for Washington DC as part of his second outreach program to respond to the toughening trade regulations, according to the Ministry of Trade, Industry and Energy.

His hurried move came as US President Donald Trump is set to impose a tariff of 25 percent on all steel imports later this week, in the wake of the US Department of Commerce’s report on Section 232 of the Trade Expansion Act, suggesting either a higher tariff or import quota on steel products.

During the four-day visit, Seoul’s chief trade policymaker is slated to meet senior officials including US Trade Representative Robert Lighthizer.

In his previous outreach visit last week, Kim had met with Trump’s chief economic adviser Gary Cohn, Secretary of Commerce Wilbur Ross and US Chamber of Commerce CEO Thomas Donohue.

On a separate track, Minister of Trade, Industry and Energy Paik Un-gyu also sent a public letter to US counterpart Ross on Monday, requesting that South Korea be exempted from Section 232, ministry officials said.

Prospects, however, remain dim as the Trump administration has repeatedly signaled a strict application of the new tariff rule without exception.

“There was no indication Trump was considering lower tariffs or exemptions for any countries,” Ross said Sunday, amid ongoing lobbying moves from key trade partner states.
 

Despite the pressing timeline and the widely expected consequences, Seoul still refrained from tariff retaliation that could trigger a prolonged trade war with the world‘s largest economy.

“Theoretically speaking, it is possible (to impose a reciprocal tariff on US products), but for now, the best strategy is to exert our best (in communications),” Deputy Prime Minister and Finance Minister Kim Dong-yeon said Tuesday in a radio interview with CBS.

He also pledged to keep in close contact with US counterparts over the Group of 20 Finance Ministers Meeting later this month to alleviate the trade barriers.

But after President Trump reiterated Monday that he is “not backing down” from his plan to raise tariffs on steel and aluminum products, concerns mounted that Seoul may have been complacent over the trade issue.

“Considering the urgency of the pending trade agendas, the Office of Trade Negotiations should be led by a minister-level official,” said Song Ki-ho, lawyer in charge of international trade issues at the Lawyers for a Democratic Society.

Trade Minister Kim is currently classified as a vice-ministerial official, according to the National Government Organization Act.

Observers also pointed out the limited resources of the trade negotiating sector. Of the 279 incumbent staff members, some 160 are directly involved in trade policies, cooperation and negotiations while the rest work in trade investment issues. The given manpower is about half that of the US Trade Representative.

The Trade Ministry has been seeking to expand the unit since last year, but the Ministry of Strategy and Finance disapproved of the plan, citing administrative inefficiency and lack of budget.

By Bae Hyun-jung (tellme@heraldcorp.com)