Steel products piled up at Pyeongtaek Port. Yonhap News

Concerns are rising for Korean companies as U.S. businesses are requesting the Trump administration to significantly expand the list of products subject to the 50% steel and aluminum tariffs.

Notably, U.S. companies are indiscriminately requesting tariffs on products that use little to no steel or aluminum, and this includes key Korean export items such as battery components and transformers.

According to foreign media reports on the 22nd (local time), the Aluminum Association of America requested that battery parts (parts of electric storage batteries) be classified as aluminum derivative products.

A transformer from HD Hyundai Electric. Courtesy of HD Hyundai

The Trump administration is imposing a 50% tariff on steel and aluminum, as well as on derivative products made from steel and aluminum, based on the value of their steel and aluminum content.

The Aluminum Association's request means that a 50% tariff would be applied to battery components based on their aluminum content.

In response, Samsung SDI submitted a dissenting opinion to the Department of Commerce on October 21st.

The reason cited was that the Aluminum Association's request is too broad and could encompass various types of batteries and related products, which contain little to no aluminum or steel.

Samsung SDI explained that battery components include separators, which do not use aluminum or steel, and that even completed battery cells are frequently imported under the specified product codes.

Furthermore, they argued that applying the steel and aluminum tariffs to battery components, which are already subject to a 25% tariff as automotive parts, would lead to double taxation and exacerbate the administrative burden for battery manufacturers.

U.S. companies have also requested that transformers be designated as steel and aluminum derivative products.

While some transformers were included in the additional list of 407 derivative products announced by the Department of Commerce in August, U.S. companies are now requesting tariffs on a wider range of transformers.

LS Electric stated that designating grain-oriented electrical steel (GOES), used in the manufacturing of transformers essential for the U.S. artificial intelligence (AI), data center, and renewable energy industries, as a derivative product would worsen the already severe transformer supply shortage and harm the U.S. economy.

In its opinion submitted to the Department of Commerce, LS Electric emphasized, "Imports from allies like South Korea provide a reliable and secure alternative to Chinese supply, directly supporting the U.S. policy objective of de-risking and reducing reliance on adversarial sources."

HD Hyundai Electric also argued in its submission that applying item-specific tariffs to transformers would deepen supply shortages, delay energy infrastructure projects, disrupt defense and public facilities, and exacerbate national security risks.

The Trump administration has established a procedure for adding products to the list of steel and aluminum derivative products and periodically solicits feedback from U.S. businesses.

After receiving industry requests for the first time in May, the Department of Commerce included home appliances such as refrigerators, dryers, washing machines, dishwashers, freezers, cooking stoves, ranges, ovens, and garbage disposals in the list of steel derivative products.

In this regard, LG Electronics pointed out that the expansion of the derivative product list seems to deviate from its original purpose and that a continued expansion of tariff targets could impose excessive and significant economic and administrative burdens on downstream manufacturers who rely on imports of such derivative products to produce finished goods in the U.S.

LG Electronics requested a review of whether home appliances and other items need to be excluded from the list, stating that the amount of steel and aluminum used in home appliance manufacturing is very small and does not pose a meaningful threat to U.S. security interests.

The Department of Commerce initiated its second round of public comment in September but has not yet announced any items to be added to the derivative product list.

The industry harbors cautious optimism that the Department of Commerce may be approaching the second expansion more carefully, given the significant industry confusion and economic repercussions caused by the inclusion of too many items in the first list expansion.