Shares of several major South Korean electrical equipment manufacturers declined on August 18 following the release of a U.S. draft notice expanding tariffs on steel and aluminum derivative products to include transformers.

According to Kwon Oh-eun of ChosunBiz, LS ELECTRIC saw its stock fall 4.72% in early KOSPI trading. Other industry players such as HD Hyundai Electric, Cheil Electric, and Hyosung Heavy Industries also experienced losses.

The U.S. Department of Commerce announced the addition of 407 product codes, including transformers, under the Harmonized Tariff Schedule of the United States (HTSUS). The 50% tariff applies specifically to steel content within affected goods and took effect immediately.

Although market reaction was swift, some analysts believe the actual impact may be limited. Son Hyun-jung, a researcher at Yuanta Securities Korea, noted that companies like HD Hyundai Electric and Hyosung Heavy Industries have U.S.-based production facilities, minimizing exposure. Others, including Sanil Electric, ILJIN Electric, and LS ELECTRIC, are reportedly in talks with North American clients to negotiate tariff-sharing and price adjustments.

Industry sources estimate that steel accounts for around 35% of a transformer's cost, translating to an effective additional tariff of approximately 18% -- a relatively modest increase over previous rates.

Source: biz.chosun.com