WASHINGTON -- President Donald Trump secured his first major trade deal 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 U.S. cars in exchange for an exemption from 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 was viewed by some analysts as confirming 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 in some quarters 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 Monday stick, they could allay some of those concerns.
In a statement published 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 sales to the United States from 2015-17. It also agreed to lower trade barriers to autos imported from the United States. Trump administration officials cited what they considered unfair barriers against U.S.-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 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 such as Hyundai and Kia have found ready markets in the United States, but the big U.S. 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 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. Trump has used the imposition of tariffs to gain leverage over the United States' trading partners in bilateral trade talks.
Washington and Seoul began negotiations in January to make changes to their 6-year-old trade agreement, one that 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.
Trump's proposed tariffs set off jostling among U.S. 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 U.S. 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 U.S. trade representative, said last week that those three trading partners, along with Argentina, Australia and Brazil, would receive an initial reprieve from the tariffs.
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 Mnuchin signaled Sunday that more deals are on the way.
"Where we've put a pause on tariffs, we're negotiating," he said.
Business on 03/27/2018