Korean Cable Makers Face New US 25% Tariff Threat After AI-Fueled Export Boom

AI data-center boom fueled exports. Now a US 25% tariff threatens Korea’s cable industry

Commerce Department seeks to add 14 more products

Electric conductor cable included under Section 232

Tariff set to rise from 15% to 25%

Exports to the US are nearing $720 million a year

South Korea’s cable industry, which has enjoyed a boom in exports to the US on the back of AI data-center construction and power-grid replacement demand, is facing a new threat. The US Commerce Department is moving to add 14 derivative products, including electric conductor cable, to the list of items subject to tariffs under Section 232 of the Trade Expansion Act.

According to government officials and industry executives on Aug. 6, the Ministry of Trade, Industry and Energy is comparing the US tariff category for “electric conductor cable” with Korean HS export codes. The Commerce Department on Aug. 3 released a proposal to designate 14 additional derivative products under Section 232 tariffs on steel, aluminum and copper. The measure is still in the public comment stage, and no deadline has been announced. The department appears poised to impose a 25% tariff in the near term.

The Commerce Department imposed 50% tariffs last year on imported steel, aluminum and copper to favor domestic producers. It later introduced a content-based tariff system, applying 50% to the metal content of certain products and a separate 15% reciprocal tariff to the remainder. After complaints mounted over the complexity of the system, the US began in April applying a flat 25% tariff to most products except transformers and machinery. At that time, some industrial machinery and power-grid equipment tied to the US AI buildout were temporarily granted a 15% rate instead of 25%. The latest move would lift some of those products to 25%.

The 14 derivative products on the proposed addition list include electric conductor cable, heat-exchanger parts, parts for welding machines and welding equipment, parts for linear-acting hydraulic engines and motors, self-propelled cranes and mobile lifting frames, tanker trailers and semitrailers, and filled steel containers. For Korean exporters, industry officials say electric conductor cable would have the biggest impact.

Korea’s cable makers have recently benefited from rising shipments to the US. Exports of copper derivative products to the US totaled about $697 million last year, equivalent to roughly $680 million. Most power-transmission cables are made of copper or aluminum.

Companies likely to be affected include LS Cable & System, Taihan Cable & Solution and Iljin Electric, which have won a series of extra-high-voltage cable and power-grid construction contracts, according to an industry official.

For extra-high-voltage cable rated at 138 kilovolts to 345 kilovolts or higher, US local production remains far short of demand. That could allow exporters to pass on at least part of the tariff burden to customers. Some in the industry also argue that equal tariffs across competing countries would have a limited effect because Korean companies remain highly competitive. LS Cable & System is also known to be increasing output after completing its US plant. Smaller cable makers and suppliers of low- and medium-voltage wires, telecom cables and wiring parts, however, would fall within the scope of the 25% tariff.

Korean companies have signed large volumes of long-term supply contracts tied to the US infrastructure boom, raising the prospect of legal and commercial disputes over tariffs. The industry needs countermeasures, including government-level trade negotiations with Washington and the establishment of offshore production arrangements, another industry official added.

Kim Dae-hoon