[THE INVESTOR] The U.S. government continues to impose heavy penalties on Korean steel exporters.

Last Friday, the U.S. Department of Commerce announced it would impose duties of a staggering 61 percent on hot-rolled flat steel products from South Korea’s POSCO.

The penalties broke down into 3.89 percent in anti-dumping duties and 57.04 percent in countervailing duties. If the department’s decision is endorsed by the U.S. International Trade Commission, it will deal a harsh blow to Korea’s leading steel exporter.

Last year, POSCO exported around 850,000 tons of hot-rolled steel products to the U.S., accounting for some 75 percent of the 1.16 million tons shipped by Korean companies.

The department also decided to impose 13.38 percent in extra duties on products from Hyundai Steel.

Last month, the department took similar action against cold-rolled flat steel from the two steelmakers.

The duties amounted to 64.7 percent for POSCO and 38.2 percent for Hyundai Steel. The department also set the penalties for other unnamed Korean companies at 24.2 percent.

Last year, the two companies exported a total of 160,000 tons of cold-rolled steel products to the U.S.

Last month, the U.S. ITC endorsed the Commerce Department’s decision to impose anti-dumping duties of up to 48 percent on corrosion-resistant steel imports from Korea.

In its final report in May, the department announced it would levy a 47.8 percent duty on Hyundai Steel and 8.75 percent on Dongkuk Steel.

Washington’s action against Korean steelmakers comes amid an intensifying trade war in the global steel industry, which is suffering a huge glut.

The U.S., along with the European Union and Australia, has adopted punitive tariffs on steel products from China. For instance, Washington has recently imposed anti-dumping duties of 266 percent and anti-subsidy duties of 256 percent on cold-rolled steel from China.

Washington’s action was prompted by China’s controversial tax rebates to steel exporters, created to support the sector’s efforts to reduce excess capacity.

In response to the harsh penalties against its steel exports, the Chinese government has openly warned of a trade war.

The disputes over steel are spreading to other countries. India announced Tuesday it would impose anti-dumping duties on steel from Korea, China, Japan, Russia, Brazil and Indonesia.

As the trade war escalates, Korean exporters are increasingly suffering the fallout, yet the Korean government is taking no action. It simply said it has stepped up monitoring of protectionism.

According to the Trade Ministry, the number of import restrictions imposed on Korean products stood at 184 in June, up from 159 a year earlier.

India slapped 30 restrictive measures on Korean imports, followed by the U.S. with 22 and China at 11.

The move away from free trade toward protectionism is especially strong in the U.S. In the run-up to the presidential election in December, candidates from both main parties advocated protectionist policies.

The main pledges of the two U.S. presidential contenders -- Hillary Clinton and Donald Trump -- are very different, but whoever becomes U.S. president is likely to strengthen protectionism.

But the U.S. is not alone in moving away from globalization.

The United Kingdom joined the trend when it recently decided to leave the European Union.

As the wave of protectionism surges, the government needs to explore ways to cope with it. Exporters are advised to recalibrate their strategies.

(theinvestor@heraldcorp.com)