U.S. metal tariffs squeeze South Korean small exporters
· UPIJune 21 (Asia Today) -- Changes to U.S. tariffs imposed under Section 232 of the Trade Expansion Act are sharply reducing the profitability of South Korean small and medium-sized manufacturers, an industry survey released Sunday found.
Companies said the revised rules had substantially increased their tariff burden, particularly for manufactured components with high processing and labor costs.
The Korea Federation of Small and Medium Business released the findings after surveying 600 companies affected by the tariffs from April 29 through May 29.
The survey found that 56.3% of respondents did not know which category of the revised U.S. tariff annex covered their exported products.
About 20.8% said the tariff rate applied to their products had increased following the revisions. Those companies reported an average increase of 16.2 percentage points.
Among companies whose products were classified under Annex I-A and faced a 50% tariff, 40% expected their export conditions to deteriorate.
Some manufacturers said tariffs calculated using the customs value assigned to finished products, rather than only the value of their steel content, had made exports commercially unviable.
A representative of a South Korean fastener manufacturer said the company's effective tariff burden had risen from about 25% before the revision to 50%.
"Imposing a high tariff on manufacturing costs, which account for most of the product's cost, is unreasonable," the representative said.
Another component manufacturer said the company was losing its ability to compete for U.S. orders as buyers demanded lower prices while tariff costs continued to increase.
Companies concerned about declining exports said they were attempting to renegotiate prices and reduce production costs, but those measures were insufficient to offset the higher duties.
Respondents identified stronger negotiations with Washington over the reclassification of products under the tariff annexes and government assistance with cost reductions as their highest priorities.
Kim Hee-jung, head of economic policy at the Korea Federation of Small and Medium Business, said small manufacturers whose products contain substantial processing and manufacturing value were bearing a structurally excessive tariff burden.
"The government should strengthen negotiations for reasonable reclassification under the annexes instead of allowing products to be classified uniformly based only on their metal content," Kim said.
Kim also called for measures to protect exporters' profitability, including assistance with logistics costs and long-term tariff consulting to help smaller companies respond to rapidly changing trade rules.
Section 232 of the U.S. Trade Expansion Act of 1962 authorizes the president to restrict imports determined to threaten U.S. national security.
The United States currently imposes a 50% Section 232 tariff on most steel and aluminum imports and covered derivative products. U.S. authorities have also expanded the list of derivative products covered by the duties.
-- Reported by Asia Today; translated by UPI
© Asia Today. Unauthorized reproduction or redistribution prohibited.
Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260619010006929