US Imposes 25% Tariff on Steel-Containing Finished Products... Impact on Korean Home Appliances and Power Equipment

Industry Players Like Samsung and LG Electronics on High Alert
"Countless Scenarios... Overall Impact Expected to Be Limited"

As the United States has decided to impose a 25% tariff on products with high steel content, such as washing machines and transformers, relevant domestic export companies have started reviewing their business operations. Industry insiders believe that the revised tariff calculation method will have varying effects depending on the product, and companies are currently weighing the pros and cons.

On April 2 (local time), U.S. President Donald Trump signed a proclamation adjusting tariffs to uniformly impose a 25% tariff on derivative products with high steel, aluminum, or copper content, calculated based on the product price.

Until now, the U.S. has imposed a 50% tariff based on the proportion of metal content such as steel included in products like washing machines and refrigerators. However, since separate calculations were required for each product, the import process was criticized for being overly complicated. To address this, the tariff calculation method has been simplified so that if the steel, aluminum, or copper content exceeds 15%, a 25% tariff is imposed on the finished product price, and if the content is lower, the product is exempted from additional itemized tariffs.

However, the itemized tariff of 50% on steel, aluminum, and copper themselves remains unchanged, and products manufactured overseas but made with U.S.-origin steel, aluminum, or copper will be subject to a 10% tariff. This tariff adjustment will take effect from 12:01 a.m. on April 6 (U.S. Eastern Time).

Experts believe that the impact of this measure will differ depending on the industry and product type. An official from the Korea International Trade Association said, "For items that originally had low steel content, the administrative burden of calculating the content value was greater than the tariff burden, so this change is positive. However, for machinery or home appliances with high steel content, the cost burden could increase."

Lee Jaeyoon, a research fellow at the Korea Institute for Industrial Economics & Trade, said, "Products with high steel content but low sales prices may benefit from the change. On the other hand, home appliances such as washing machines, which are sold at higher prices, will find the 25% tariff on the finished product price to be a greater burden."

Korean companies exporting home appliances to the U.S. are also responding cautiously. Although the nominal tariff rate is lower, the tax base has increased, which could actually raise tariff burdens. For example, if a refrigerator with steel material costs of $200 is exported for $1,000, the previous system required a $100 steel tariff (50%) and a $120 reciprocal tariff (15%) on the $800 value excluding material cost, totaling $220. Under the new system, a 25% tariff on the $1,000 finished product price means companies must pay $250 in tariffs.

An official from the home appliance industry said, "Since steel and aluminum content varies greatly by item, we will have to calculate individually to determine whether the revised tariff calculation method is advantageous. However, even for items where tariff burdens increase, the impact will not be significant, so the overall effect on the industry will be limited."

Both Samsung Electronics and LG Electronics have already secured production bases in North America. Samsung supplies washing machines from its South Carolina plant, while LG supplies washing machines and dryers from its Tennessee plant. However, since it is not possible to fully meet North American demand with local production, it is expected to be difficult to completely avoid tariff exposure.

Transformer manufacturers also face more complex calculations. The steel content in transformers is around 20-30%, so it is inevitable that they will be subject to the 25% tariff on finished product prices. However, due to the current global boom in the power equipment market, which favors suppliers, it is expected that a critical blow can be avoided.

An official from the power industry explained, "For ultra-high voltage transformers, there are already orders worth several trillion won, and profit margins are nearing 20%. With global demand for power equipment surging, the tariff burden has already been largely passed on to customers." However, the official added, "Given the current unfavorable international situation, the tariff shock could lead to higher prices and reduced facility investment. The greater concern is not the immediate tariff burden, but rather the potential contraction in power infrastructure demand due to domestic and external risks."

This content was produced with the assistance of AI translation services.