A view of the rolls of hot-rolled steel produced by POSCO.(Photo: POSCO)

POSCO and Hyundai Steel may be able to ship their steel products to the U.S. under the same tax scheme as before the U.S. dropped its tariff bombs on foreign steel imports three years ago.

But the competition among Korean steelmakers to export more steel to the U.S. is nonetheless expected to get hotter because Korean steel shipment to the U.S. would still be limited to around 70 percent of the average steel shipment to the U.S. during 2015-2017, or 2.68 million tons.

According to the Ministry of Trade, Industry and Energy and steel industry sources, the U.S. Department of Commerce cut the 58.68 percent countervailing duties on Korean steel levied from August 2016, to as much as to 0.55 percent at the final decision on its first annual review of the special tax on Korean steel exports to the U.S. The new tax rate is lower than 1.73 percent they decided to charge at the end of the annual review of the countervailing tax last year.

The U.S. government slashed the countervailing duty (CVD) on hot-rolled steel sheets produced by POSCO from 41.57% to 0.55% after its annual review. Further, the CVD on hot-rolled steel from South Korea's second largest steelmaker Hyundai Steel Co. has been lowered from 3.95% to 0.58%.

The U.S. Commerce Dep’t will decide on the anti-dumping duties charged on Korean steel brought into the U.S. on June 25, which stands at 7.67 percent at the end of the first annual review of the special duty and could be reduced further.

POSCO officials said total tariffs charged on Korean steel could be cut to as low as to 1 percent if other taxes were reduced to as much as the countervailing duties.

Tariffs have long been used to prop up homegrown industries by getting locals to buy goods produced domestically. For most of the past century, however, tariffs have fallen out of favor because they often lead to reduced trade, higher prices for consumers in tariff-wielding countries, and retaliation from abroad. With tariffs once again rising under U.S. President Donald J. Trump and global trade slowing, many experts fear companies could soon face higher costs and the world economy could suffer.

A tariff is a tax imposed on goods imported from a foreign country. Tariffs are paid by an importing business to its home country’s government, most commonly as a fixed percentage of the value of the imports.

Tariffs can serve several goals. Like all taxes, they provide a modest source of government revenue. Several countries have also used tariffs to help their infant industries at home, hoping to shelter local firms from foreign competitors. Some tariffs are also meant to address unfair practices that other countries have used to make their exports artificially cheap.

The United States Department of Commerce has raised the anti-dumping duties on Korean steel imports from the previous 10.09 percent to 40.8 percent, citing an error in adjusting the won-dollar exchange rate. The latest decision came about a month after the department imposed a 10.09 percent preliminary tariff on Korean steel products in October. The department explained it did not convert the Korean won to U.S. dollars while calculating the anti-dumping tariff rate.

“We are amending the preliminary determination of sales at less-than-fair-value for wire rod from Korea to reflect the correction of an administrative error made in the margin calculation for POSCO,” the Washington-based authority said in a statement last week.

The decision came after a group of U.S. steelmakers called for the authority to amend the previous determination and rectify the tariff rate on the Korean steelmakers' carbon and alloy steel wire rods in consideration of the error.