South Korea's Trade Minister Cheong In-kyo said on Tuesday that U.S. President Donald Trump's 25% tariffs on steel and aluminium imports due to come into force in March would reduce U.S. steel demand and erode steel exporters' profitability.
He said, however, the tariffs may offer opportunities for Korean companies to find new export markets.
South Korea will "actively consider" whether there is room for negotiation on the tariffs with the United States, even though Trump raised tariffs on steel and aluminium imports on Monday to a flat 25% "without exceptions or exemptions".
Cheong was speaking at a meeting with officials from steel companies in Seoul.
South Korean steelmakers extended losses on Tuesday. POSCO Holdings (005490.KS) closed down 0.8%, falling for a second straight day, and Dongkuk Steel Mill (460860.KS) fell 0.9% to close at a three-month low, while the broader KOSPI market (.KS11) rose 0.7%.
2018 EXEMPTIONS
During Trump's first term in 2018, South Korea and the United States agreed on an annual duty-free steel quota of 70% of volumes shipped to the U.S. on average from 2015-17.
The deal made South Korea the first U.S. ally to secure an indefinite exemption on the steel tariffs.
"Thus, we see room for negotiation with the second Trump administration if necessary," Citi said in a report.
Citi estimates that the latest U.S. steel tariffs will have a negative impact on South Korea's economy by around 0.11% to 0.22% of gross domestic product.
