South Korea’s Steel City Fears Collapse Amid US Tariff Hike
The industrial city of Pohang, South Korea’s steelmaking heartland, is bracing for severe consequences as Washington’s new 25% tariffs on steel imports loom large, threatening to destabilise the region’s economy. Once the cornerstone of South Korea’s meteoric economic rise, Pohang’s steel sector now finds itself in the eye of a perfect storm, facing heightened challenges exacerbated by foreign competition and the looming threat of protectionist trade policies.
Pohang is home to POSCO, South Korea’s largest steelmaker, and several other key players like Hyundai Steel and Dongkuk Steel. These companies have been integral to the nation’s industrialisation, transforming South Korea into one of the world’s top steel exporters. However, in recent years, South Korea’s steel industry has been grappling with the oversupply of cheaper steel from China and a global dip in demand. Now, with the US planning a hefty 25% tariff on steel imports starting next month, Pohang’s economy could be hit hard. South Korea was the fourth-largest exporter of steel to the US in 2023, accounting for 13% of its total imports, and such a significant tariff could deliver a devastating blow.
“The steel industry is a vital national industry that serves as a fundamental material for key sectors such as construction, automotive, and shipbuilding,” Pohang’s mayor Lee Kang-deok warned. He stressed that the collapse of the steel industry could destabilise South Korea’s entire economy. The city’s economic fabric, already under strain, could unravel further if the country fails to mitigate the effects of the US tariffs. While some analysts believe that the tariffs could open doors for South Korean firms to explore new markets, workers and businesses in Pohang fear that the tariffs will worsen the situation. Several factories have already closed, leading to job cuts and a loss of the city’s once-thriving vibrancy. Workers in Pohang are worried about increasing unemployment and the shrinking opportunities in the steel sector.
Vladimir Tikhonov, a professor of Korea studies at the University of Oslo, noted that Trump’s protectionist measures would exacerbate the challenges for South Korea’s already struggling steel industry. The combination of the US tariffs and the influx of cheap Chinese steel into Southeast Asia and Europe is expected to intensify price competition for South Korean producers. For long-time steelworkers like Lee Woo-man, the situation feels like an unending crisis. Having worked as a subcontractor for POSCO for two decades, Lee has seen the city’s fortunes decline. He recalled a time when the city’s mills were bustling, and the smoke rising from the chimneys symbolised prosperity. Now, with mills shutting down and job security at an all-time low, Lee fears that Pohang’s steel legacy may soon fade into history. As Pohang’s workers continue to struggle, the city faces a critical crossroads. If the tariffs remain in place, the future of the steel industry in this once-thriving industrial hub is uncertain, and with it, the future of the city itself.
