Ministry of Trade: "U.S. Steel Tariff Restructuring to Increase Burden on Home Appliances, Ease Burden on Cosmetics and Others"

Taxation Basis Changed from "Value of Content" to "Customs Clearance Price"

Number of Tariffed Items Down 17% from Previous Level

However, Tariff Burden May Rise for Some Machinery and Home Appliances

The government has analyzed that the administrative burden on Korean companies will generally be eased following the restructuring of the U.S. Section 232 tariffs on steel. However, it noted that the burden may increase for home appliances, while for items excluded from derivative products—such as cosmetics and food—the burden will be reduced. The government expects that the impact of the steel tariff restructuring will differ by industry.

The Ministry of Trade, Industry and Energy stated on April 6 (Eastern Standard Time) that with the changes to the U.S. Section 232 tariff regime on steel, aluminum, and copper derivative products set to take effect at 12:01 a.m., there will be an overall easing of administrative burden on companies, although the actual impact will vary depending on the item.

The Ministry expects that the shift in the basis for taxation—from the value of steel content within products to the customs clearance price—will especially reduce the administrative burden for small and medium-sized enterprises. Furthermore, the number of items subject to Section 232 tariffs on steel and aluminum will decrease by about 17% (equivalent to 2.3 billion dollars) compared to the previous regime, which is expected to significantly lower the tariff burden for Korean companies.

An official from the Ministry explained, "In addition, due to the nature of Section 232 tariffs—which are imposed in addition to the World Trade Organization (WTO) Most-Favored Nation (MFN) tariffs or Free Trade Agreement (FTA) preferential tariffs—Korean products that meet the Korea-U.S. FTA requirements will have an advantage over competitors from countries without an FTA with the United States. Under the previous content-value basis, tariffs differed between companies even for the same item, making it hard to determine winners and losers. However, with the new unified ad valorem rates of 50%, 25%, or 15% of the customs clearance price, Korean products are expected to benefit." For Korea, the Korea-U.S. FTA tariff rate for steel, aluminum, and copper derivative products is 0%.

The impact will vary by product. Cosmetics and food, for example, will be subject only to the global tariff rate of 10%, as they have been excluded from the list of derivative products. Even for items subject to tariffs, if the weight of steel, aluminum, or copper is less than 15% of the total product weight, Section 232 tariffs will be exempted. Likewise, for key export items such as ultra-high-voltage transformers and some machine tools, the tariff rate will be reduced from 25% to 15% until December 31, 2027, meaning the tariff burden will decrease compared to before during this period. For most automotive parts—which have already been subject to automotive Section 232 tariffs—this round of steel and aluminum Section 232 tariff restructuring is not expected to have any impact. The Ministry also noted that for certain products with high steel and aluminum content, the tariff rate, which previously exceeded 30%, will now be unified to 25%, providing some advantage.

For steel, aluminum, and copper themselves, there will be no change in tariff rates compared to the previous system, so the impact will be limited. As for washing machines, a major Korean export to the U.S., the high proportion of local production in the U.S. means the impact of the revised regime will also be limited. However, the Ministry analyzed that for certain machinery and home appliances, there is a possibility that the tariff burden may increase.

Hyejin Kwon, Director-General for Trade Negotiations at the Ministry of Trade, Industry and Energy, said, "Some items will be disadvantaged by this policy change, but there are also items that will benefit, so it is difficult to make a blanket assessment. The government will closely analyze the impact by industry, and will continue to raise the issue of burden reduction for our companies in future consultations with the U.S. side."

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