Trump tariffs drive unexpected alliances in steel, car industries

POSCO CEO Lee Hee-geun, right, and Hyundai Steel CEO Seo Gang-hyun listen to Industry Minister Ahn Duk-geun during a meeting to discuss countermeasures against U.S. steel tariffs at POSCO Center in Seoul, March 13. Yonhap

The proverb “Yesterday’s enemy is today’s friend” may describe recent strategies Korean manufacturers have taken to counteract uncertainty over U.S. President Donald Trump’s trade policies.

After the U.S. imposed sweeping 25 percent tariffs on all imports of steel products and cars under the stated intent of protecting American companies, longtime rivals in the steel, battery and automotive sectors began extending olive branches to each other.

POSCO is reportedly considering an investment to acquire a partial stake in Hyundai Steel’s electric arc furnace-based integrated steel mill, scheduled to be built in Louisiana by 2029 and begin production the same year.

If the cooperative agreement proceeds, Korea’s two largest steelmakers will join forces in the U.S.

The potential partnership is expected to help POSCO secure a production base in the U.S. market, while enabling Hyundai Steel to raise capital for the mill’s construction.

POSCO has already signaled its intent to boost investments in North America. Hyundai Steel also announced it would seek external investors to fund nearly half of the $5.8 billion needed for the project.

Although both companies have neither confirmed nor denied the partnership speculation, industry insiders believe their collaboration is highly likely.

“We’ve been reviewing various strategic options related to investment in the U.S.,” a POSCO official said.

SK IE Technology is also believed to have resumed supplying battery separators to LG Chem and LG Energy Solution, for the first time since SK and LG became embroiled in a two-year patent dispute over electric vehicle (EV) battery technology.

After SK lost the lawsuit in 2021 and agreed to a 2 trillion won ($1.4 billion) settlement, LG switched to Chinese suppliers for key materials used in EV batteries.

Mirae Asset Securities analyst Kim Chul-joong said that hefty U.S. tariffs on China have made it difficult for battery manufacturers to depend on Chinese materials.

“SK and LG seem to have reconnected their supply chain after years of estrangement caused by the patent dispute,” he said. “This appears to be a result of significant U.S. tariff hikes on China and growing uncertainty in global supply chains.”

Hyundai Motor Group Executive Chair Chung Euisun, right, shakes hands with General Motors Chair and CEO Mary Barra during a memorandum of understanding signing ceremony at Genesis House in New York in September 2024. Courtesy of Hyundai Motor Company

Hyundai Motor has continued to strengthen its partnership with General Motors (GM) since the two companies formed a strategic alliance last September.

They are expected to announce updates to the partnership during an upcoming meeting between Hyundai Motor Group Executive Chair Chung Euisun and GM CEO Mary Barra at a forum in Detroit in September.

Last month, it was reported that the two carmakers were close to finalizing a deal in which Hyundai Motor would share two electric commercial van models with GM, while the latter would provide the former with pickup trucks to sell under its own brand in North America.

Such collaboration has been seen as a way for Hyundai Motor to reduce tariff exposure amid ongoing efforts to expand its presence in the U.S. commercial vehicle market.