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South Korea Agrees to Alter Trade Pact With U.S. to Avoid Steel Tariffs South Korea Agrees to Alter Trade Pact With U.S. to Avoid Steel Tariffs
(35 minutes later)
South Korea said on Monday that it had won an exemption from United States steel tariffs after the two countries agreed to amend their free-trade deal. South Korea said on Monday that it had won an exemption from United States steel tariffs after the two countries agreed to amend their free-trade deal, appearing to end a dispute that had raised tensions between Washington and a reliable Asian ally.
The agreement in principle came amid a flurry of exemptions and revisions to the steel and aluminum tariffs announced by the White House this month. The proposed protections prompted unease in financial markets and in foreign capitals, but their impact is now in question. Most major American trading partners have been granted exemptions, at least temporarily, meaning the upside for domestic producers in the United States could be limited. The agreement in principle also seemed to confirm President Trump’s strategy of extracting concessions in return for exemptions and revisions to the blanket steel and aluminum tariffs announced by the White House this month. In this case, South Korea agreed to curb its steel exports to the United States and lift a cap on American car sales to South Korea to avoid the tariffs.
In the case of South Korea, the country was the third-biggest exporter of steel to the United States in 2016, after Canada and the European Union. Robert Lighthizer, the United States trade representative, said last week that those three trading partners, along with Argentina, Australia and Brazil, would receive an initial reprieve from the tariffs. The White House’s proposed trade penalties, part of a wide-ranging protectionist push by the Trump administration in recent weeks that has particularly targeted China, have prompted unease in financial markets and in foreign capitals, stoking fears of a global trade war. If the changes to the deal announced on Monday stick, they could allay some of those concerns.
In a statement published on Monday, the South Korean Trade Ministry said it had agreed to adhere to a quota of 2.68 million tons of steel exports to the United States a year, which it said was roughly equivalent to 70 percent of its annual average sale to the United States from 2015 to 2017. In return, the ministry said, it would be exempt from the tariffs. In a statement published on Monday, the South Korean Trade Ministry said it had agreed to adhere to a quota of 2.68 million tons of steel exports to the United States a year, which it said was roughly equivalent to 70 percent of its annual average sale to the United States from 2015 to 2017. It also agreed to lower trade barriers to autos imported from the United States. Trump administration officials cited what they considered unfair barriers against American-made cars when they began to pressure South Korea last year to amend the trade pact.
In return, the Trade Ministry said, South Korea would be exempt from the steel tariffs.
The deal appeared to be an early vindication of the White House’s efforts to use the penalties as a bargaining chip in trade negotiations.
“I think the strategy has worked, quite frankly,” Steven Mnuchin, the Treasury secretary, told Fox News in an interview on Sunday. “We announced the tariff. We said we were going to proceed. But, again, we said we’d simultaneously negotiate.”
“I think this is an absolute win-win,” he added, referring to the agreement with South Korea.
Under the deal, the United States would be allowed to export 50,000 vehicles annually to South Korea without meeting local safety requirements — double the current number.
Cars are a major reason for Seoul’s trade surplus with Washington. Brands like Hyundai and Kia have found ready markets in the United States, but the big American automakers have complained that restrictions keep them from trying to make the same headway in the South Korean market.
Mr. Trump’s proposed tariffs set off jostling among American allies and trading partners including Australia, the European Union and Japan, as well as South Korea, to win exemptions.
But the impact of the tariffs is increasingly in question — most major American trading partners have been granted exemptions, at least temporarily, meaning the upside for domestic producers in the United States could be limited.
South Korea was the third-biggest exporter of steel to the United States in 2016, after Canada and the European Union. Robert Lighthizer, the United States trade representative, said last week that those three trading partners, along with Argentina, Australia and Brazil, would receive an initial reprieve from the tariffs.
Kim Hyun-chong, South Korea’s trade minister, also told journalists on Monday that there would be no further opening of his country’s agricultural markets, and no changes to tariffs that had already been lifted.Kim Hyun-chong, South Korea’s trade minister, also told journalists on Monday that there would be no further opening of his country’s agricultural markets, and no changes to tariffs that had already been lifted.