President Donald Trump takes a question from a reporter during an event signing a bill blocking California's rule banning the sale of new gas-powered cars by 2035, in the East Room of the White House, Thursday in Washington. (AP-Yonhap)
President Donald Trump takes a question from a reporter during an event signing a bill blocking California's rule banning the sale of new gas-powered cars by 2035, in the East Room of the White House, Thursday in Washington. (AP-Yonhap)

The Trump administration's decision to expand steel tariffs to include washing machines, refrigerators and other household appliances containing steel components is stoking fresh concerns for Korean appliance giants Samsung Electronics and LG Electronics.

The Department of Commerce said the steel duties, which are currently at 50 percent, will apply to so-called “steel-derivative products” starting June 23, in a notice published in the Federal Register on Thursday. Newly affected items include combined refrigerator-freezers, small and large dryers, washing machines, dishwashers, chest and upright freezers, cooking stoves, rages and ovens, food waste disposals and welded wire racks.

The duties will apply to the value of the steel content in each import, the notice said, meaning items with higher steel content will face higher tariffs.

The decision comes just a week after Trump ratcheted up tariffs on imported steel and aluminum to 50 percent, up from the initial 25 percent announced in March.

The latest round of tariffs could significantly affect South Korean electronics giants like Samsung Electronics and LG Electronics that sell a wide range of home appliances in the US market, including refrigerators, washers, dryers, dishwashers and ovens.

While both companies operate US facilities, the bulk of their home appliances sold in the American market remains overseas, including in South Korea and Mexico. Much of the steel used in these appliances is also sourced from outside the US.

Both Samsung and LG set up production facilities for home appliances during the Trump's first term, largely in response to his tariff policies. Samsung manufactures washing machines in Newberry, South Carolina, while LG produces washing machines and dryers at its plant in Clarksville, Tennesse.

With Trump's second term and escalated tariff measures, the two companies are reportedly considering relocating some of its production in Mexico to its US plants.

Analysts say tariffs on imported steel could drive up production costs, which companies may have no choice but to pass on to consumers by hiking prices.

Samsung and LG together account for around 40 percent of the home appliance market in the US, according to market tracker Traqline. If they raise prices, it could hurt their price competitiveness and reduce sales volume in the all-important American market.

"We are closely monitoring the situation in response to the tariffs," said an industry official in condition of anonymity.

In response to new tariff measures, South Korea’s Ministry of Trade, Industry and Energy on Friday held an emergency meeting with officials from Samsung, LG and their suppliers to assess the situation and discuss possible responses.

The ministry said it will continue to operate the task force for the home appliance industry and maintain close communication with appliance manufacturers to monitor the impact and come up with support measures.

By Ahn Sung-mi (sahn@heraldcorp.com)