Amid Tariff Concerns, Two South Korean Steelmakers, POSCO and Hyundai Motor, Cooperate to Build a Steel Plant in the United States

POSCO Group and Hyundai Motor Group have established a strategic partnership, marking a rare cooperation between the two major South Korean steelmakers. POSCO will invest in a new steel plant in the United States for Hyundai Steel, the steel manufacturing subsidiary of Hyundai Motor Group, as the two companies work together to cope with the growing global trade tensions, especially the possibility of a 25% tariff on imported steel during the Trump administration.

Although neither company directly mentioned US tariffs as the reason behind the investment, they emphasized that the rapidly changing global trade pattern is the driving force. The agreement, which officially came into effect on the 21st, covers cooperation in the fields of steel and rechargeable batteries.

Under the agreement, the two groups will jointly invest in the construction of an integrated steel plant in Louisiana. The plant will use electric arc furnace technology and is scheduled to be completed and put into operation in 2029. After commissioning, it is expected to produce 2.7 million tons of steel plates per year for global automakers. The project is expected to cost $5.8 billion, but specific details of Posco's investment have not been disclosed.

Hyundai Motor Group Executive Chairman Chung Eui-sun first revealed the Louisiana project during a meeting with Trump at the White House last month. The project is part of Hyundai's $21 billion U.S. investment plan over the next four years. Hyundai Steel previously announced plans to find external investors to cover nearly half of the project's costs.

POSCO is reportedly considering selling some of the plant's products under its own brand to supplement its current capacity for Mexican automakers. The investment also provides Posco with a way to ease long-standing trade barriers in the North American market.

Lee Ju-tae, president of POSCO Holdings, said: "Through our synergies, we can achieve sustainable growth in the steel and battery industries amid global trade changes."

The collaboration also extends to battery materials. Posco has invested in lithium production and produces positive and negative electrode materials through its subsidiary POSCO Future M, aiming to support Hyundai's electrification plans. Hyundai Motor Group aims to achieve an annual production of 3.2 million electric vehicles by 2030.

The partnership is expected to help Hyundai secure a stable supply of battery components amid tightening trade regulations in the United States and the European Union.

"By joining forces with POSCO, we aim to enhance our global competitiveness while laying the foundation for sustainable growth and leadership in future mobility," a Hyundai Motor Group spokesman said.