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Trump Gets First Major Trade Deal, as South Korea Looks to Avoid Tariffs Trump Gets First Major Trade Deal, as South Korea Looks to Avoid Tariffs
(about 11 hours later)
WASHINGTON — President Trump secured his first major trade deal on Monday as the United States and South Korea reached an agreement to renegotiate their trade pact, with Seoul agreeing to reduce its steel exports and open its market to American cars in exchange for an exemption from Mr. Trump’s global tariffs on steel and aluminum.WASHINGTON — President Trump secured his first major trade deal on Monday as the United States and South Korea reached an agreement to renegotiate their trade pact, with Seoul agreeing to reduce its steel exports and open its market to American cars in exchange for an exemption from Mr. Trump’s global tariffs on steel and aluminum.
The deal comes at a time of heightened tension on the Korean Peninsula, with the White House planning to move forward with talks with North Korea’s leader, Kim Jong-un, and appears to end a dispute that had strained ties between Washington and a reliable Asian ally. It also seemed to confirm Mr. Trump’s “America First” approach to trade, in which he has sought to extract concessions in return for exemptions and revisions to the blanket steel and aluminum tariffs announced by the White House this month. Tension is high on the Korean Peninsula, with the White House planning to move forward with talks with North Korea’s leader, Kim Jong-un, and this deal appears to end a dispute that had strained ties between Washington and a reliable Asian ally. It also seemed to confirm Mr. Trump’s “America First” approach to trade, in which he has sought to extract concessions in return for exemptions and revisions to the blanket steel and aluminum tariffs announced by the White House this month.
The tariffs, part of a wide-ranging push by the Trump administration in recent weeks that particularly targeted China, had been derided as a protectionist policy that could start a global trade war, prompting unease in financial markets and in foreign capitals. If the changes to the deal announced on Monday stick, they could allay some of those concerns.The tariffs, part of a wide-ranging push by the Trump administration in recent weeks that particularly targeted China, had been derided as a protectionist policy that could start a global trade war, prompting unease in financial markets and in foreign capitals. 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. 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 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.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.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 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.“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.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.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.
Kim Hyun-chong, South Korea’s trade minister, told journalists on Monday, however, 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, told journalists on Monday, however, that there would be no further opening of his country’s agricultural markets, and no changes to tariffs that had already been lifted.
The Trump administration suggested last week that the deal with South Korea was close as it unveiled new tariffs targeting China. Mr. Trump has used the imposition of tariffs to gain leverage over America’s trading partners in bilateral trade talks.The Trump administration suggested last week that the deal with South Korea was close as it unveiled new tariffs targeting China. Mr. Trump has used the imposition of tariffs to gain leverage over America’s trading partners in bilateral trade talks.
Washington and Seoul began negotiations in January to make changes to their six-year-old trade agreement, one that Mr. Trump had previously called a “horrible deal.” The United States has prioritized reducing its trade deficits with other countries; in 2016, it had a $17 billion deficit with South Korea.Washington and Seoul began negotiations in January to make changes to their six-year-old trade agreement, one that Mr. Trump had previously called a “horrible deal.” The United States has prioritized reducing its trade deficits with other countries; in 2016, it had a $17 billion deficit with South Korea.
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.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. But the impact of the tariffs is increasingly in question — most major American trading partners have been granted exemptions, at least temporarily.
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.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.
Mr. Trump pulled out of the 12-nation Trans-Pacific Partnership trade pact last year and said that he would focus on negotiating new bilateral deals with countries around the world. The steel tariffs are speeding up that process, and Mr. Mnuchin signaled on Sunday that more deals are on the way.Mr. Trump pulled out of the 12-nation Trans-Pacific Partnership trade pact last year and said that he would focus on negotiating new bilateral deals with countries around the world. The steel tariffs are speeding up that process, and Mr. Mnuchin signaled on Sunday that more deals are on the way.
“Where we’ve put a pause on tariffs, we’re negotiating,” he said.“Where we’ve put a pause on tariffs, we’re negotiating,” he said.