Korean steelmakers hit by Japanese rival's US expansion

High-grade steel products from Korea are expected to lose ground in the U.S. market as Japan's Nippon Steel has won approval from the United States for its acquisition of U.S. Steel.

Amid Washington's imposition of 50 percent tariffs on steel and aluminum imports, Korean companies are expected to rely more heavily on exports to Asian countries until their planned U.S. factory becomes operational.

On Friday, U.S. President Donald Trump signed an executive order granting conditional approval for Nippon Steel's takeover of U.S. Steel.

The decision came more than a year after the Japanese firm proposed its $15 billion acquisition of the American steelmaker in December 2023. The previous Joe Biden administration had blocked the deal amid strong opposition from unionized U.S. steelworkers.

Although Trump initially opposed the acquisition, Japanese Prime Minister Shigeru Ishiba reportedly persuaded him during their summit in February.

Once finalized, the deal will make Nippon Steel the world’s third-largest steelmaker by output, surpassing China’s Anshan Iron and Steel Group. Korea's POSCO ranks eighth and Hyundai Steel comes in at 21st.

“Japanese high-grade steel products will increase their U.S. market share in the long run,” a domestic steel industry official said. “It will be inevitable that Korean companies fall behind Nippon Steel in the U.S. market.”

Although Hyundai Steel plans to build a mill in Louisiana in collaboration with POSCO, the factory is not scheduled to begin operations until 2029. Until then, Nippon Steel is expected to hold a competitive advantage, as it will be able to sell products in the U.S. without facing tariffs.

Still, Korean steelmakers say the Japanese firm's expansion will have limited impact on their revenues.

“Most of the steel products we manufacture are used domestically, and a significant portion is exported to China and Southeast Asia,” the official said.

A “golden share” agreement between Nippon Steel and the U.S. government could also limit the Japanese firm’s influence.

U.S. Commerce Secretary Howard Lutnick said the president will have the authority to block any relocation of U.S. Steel’s headquarters from Pittsburgh, a name change or decisions to reduce, delay or waive the $14 billion in near-term investments promised for U.S. Steel.

The agreement could also prohibit Nippon Steel from moving production or jobs out of the U.S., or from closing or idling plants outside of standard safety or upgrade-related shutdowns.

“The golden share held by the United States in U.S. Steel has powerful terms that directly benefit and protect America, Pennsylvania, the great steelworkers of U.S. Steel and U.S. manufacturers that will have massively expanded access to domestically produced steel,” Lutnick wrote on social media.

Meanwhile, Japan has failed to secure an exemption from the 50 percent tariff for its steel exports to the U.S., even after a 30-minute meeting between the two nations' leaders at the G7 Summit in Canada on Monday.