As the U.S. government's decision to impose additional tariffs on ultra-high-voltage cables and other products approaches, the calculations for Korea's wire and cable industry have become complicated due to the 'blue tsunami' that emerged in the U.S. midterm elections. Expectations that the Democratic Party, which has secured control of both the House and the Senate, will check tariff imposition coexist with concerns that a brake may be put on the expansion of AI (artificial intelligence) data centers.
According to wire and cable industry sources on the 8th, the Bureau of Industry and Security (BIS) under the U.S. Department of Commerce is expected to announce as early as this month whether it will expand the scope of tariffs under Section 232 of the Trade Expansion Act. The BIS has disclosed a plan to add 14 items, including insulated electrical cables, to the list of tariff targets for steel, aluminum, and copper derivatives, and solicited public comments until August 27. If Korean-made cables, currently subject to a 12.5% tariff, are included in Section 232 targets, the tariff rate could rise to 25%.
Major domestic wire and cable companies are within the impact zone of the tariff hike. LS Cable & System is constructing an ultra-high-voltage submarine cable plant in Virginia, U.S., with mass production targeted for 2028. If additional tariffs begin before local mass production starts, the burden will inevitably increase. Taihan Cable & Solution also has a structure where it produces its core products, such as ultra-high-voltage cables, domestically and exports them to the U.S., so it is closely monitoring the final applicable items and implementation timing.
In opinion letters submitted to the BIS last August, both companies pointed out that additional tariffs could increase the cost of expanding U.S. power infrastructure. This is because local production capacity cannot keep up with demand, and ultra-high-voltage cables, which have stringent technical requirements, are difficult to switch suppliers for in the short term. LS Cable & System requested that "tariff rates and implementation timing be applied in stages," while Taihan Cable & Solution urged that high-voltage and ultra-high-voltage cables be excluded from additional tariff targets.
In this situation, the 'blue wave,' where the Democratic Party recently won both the House and Senate in the U.S. midterm elections, has emerged as a new variable. The Democratic Party, now the majority party in both houses, can pressure the administration's tariff policy through hearings and legislation. However, there is also analysis that election results will not immediately lead to tariff relief, as Section 232 of the Trade Expansion Act delegates import restriction authority to the president based on national security grounds.
An industry official said, "While there is a possibility that tariff policies may be revised depending on the midterm election results, political variables such as President Trump's exercise of veto power remain," adding, "At present, it is difficult to predict whether tariffs will be imposed and their impact."
In addition, the wire and cable industry is closely watching the pace of data center expansion. The Democratic Party camp has repeatedly demanded a halt to the construction of domestic AI data centers. Furthermore, referendums were held in 10 U.S. states alongside the midterm elections, and out of 41 data-center-related measures, results showed support for measures restricting new data center establishment within local areas or opposition to development in 40 cases.
If schedules for data center construction or power grid connections are delayed, related cable orders will inevitably be postponed as well. So far, the expansion of data centers and the replacement of aging power grids have combined to make wire and cable supply tight within the U.S., and ultra-high-voltage cables, in particular, were assessed to have room to reflect part of the tariff burden in delivery prices due to limited suppliers. However, concerns are growing that the schedules for data center groundbreaking or power grid connections themselves may be delayed.
Another industry official stated, "Because U.S. ultra-high-voltage cable suppliers are limited, customers must also consider additional cost burdens as demand increases," adding, "There is a possibility that part of the tariff burden will be reflected in product prices depending on contract terms."
in INDUSTRY
