S. Korean firms brace for impact with new U.S. steel and aluminum tariffs

So what are the implications of U.S. import duties on steel and aluminium for South Korean businesses?

Our Moon Hye-ryeon takes a look.

With the Trump administration's 25 percent tariffs on steel and aluminum imports kicking in starting Wednesday, South Korean firms are bracing for impact.

Previously, exports were duty-free but capped at 2-point-6-3 million tons under a quota system.

Now, the quota is gone, but all shipments will face the tariffs posing both risks and opportunities.

As tariffs now apply to top exporters Canada, Mexico, and Brazil, South Korea the fourth largest supplier to the U.S. may find new openings in the U.S. market.

Still, the risks are significant, with intense competition such as cheaper steel products from Southeast Asia, as well as the inclusion of steel and aluminum-derived products – such as bolts, nuts, and springs – under the new tariff scheme.

These products are primarily manufactured by small and medium-sized businesses, which have fewer resources to absorb the impact, making them especially vulnerable to financial losses.

At a conference on Wednesday led by the Ministry of SMEs and Startups, industry insiders spoke up about their concerns.

Shinjin Fasteners is one such company that produces nuts and bolts, with 35 percent of its sales dependent on exports to the U.S. and Europe.

"Developing new products to stay competitive isn't easy, especially when it comes to sourcing materials. It's not like there's a set supply from the start you have to create value and generate demand through product development."

Another company, GJ Aluminum, discussed the challenges of diversifying its exports.

"We're trying to focus more on Europe and Southeast Asia, but the challenge is that our facilities have primarily been set up for the U.S. market and each of these new regions has very different requirements and characteristics."

In order to minimize the impact on domestic firms, the South Korean government is building a support system such as stabilization funds and 15 nationwide support centers, as well as gathering opinions.

"It looks to be around 1800 domestic firms that are currently exporting to the U.S. We want to move quickly with a survey to get a clearer picture of the expected impact and what kind of targeted support these businesses will need."

Following Industry Minister Ahn Duk-geun's visit to Washington to establish a communication channel with the Trump administration regarding tariffs, the country's Minister for Trade is also due to visit the U.S. to continue talks.

Moon Hye-ryeon, Arirang News.