The U.S. will be able to sell more vehicles and auto parts in South Korea under a deal the Trump administration Tuesday hailed as the first significant victory from its “America First” policy of imposing stiff tariffs on steel imports.
In addition to allowing more cars, the deal imposes a limit of about 2.68 million tons of steel Korea can export to the U.S. That amount is equal to about 70% of the annual average Korean steel exports to the U.S. between 2015 and 2017.
The agreement, essentially a renegotiation of the United States-Korea Free Trade Agreement (KORUS FTA) both countries first signed in 2007, was billed as “historic,” by senior administration officials in a call to reporters Tuesday announcing the breakthrough.
On Sunday, Treasury Secretary Steve Mnuchin said the strategy of threatening to slap tariffs of as much as 25% on imported steel and up to 10% on imported aluminum was already bearing fruit. South Korea will escape the U.S. tariff on steel but officials said no deal was reached to remove the one on aluminum.
Mnuchin, who was not part of Tuesday’s call, described the deal an “absolute win-win” on Fox News Sunday.
“I think the strategy has worked, quite frankly. So we announced the tariff. We said we were going to proceed. But, again, we said we’d simultaneously negotiate,” Mnuchin said on the show. “So, South Korea will reduce the amount of steel that they send into the United States as part of this.”
South Korea Trade Minister Kim Hyun-chong announced the deal as well on Monday in Seoul.
Under the renegotiated KORUS, South Korea also will allow the U.S. to extend its 25% tariff on imports of Korean pickup trucks by an additional 20 years to 2041. And South Korea will double — to 50,000 — the number of U.S. vehicles entering the country annually that don’t have to meet Korean safety standards as long as they met U.S. standards.
The U.S. exported only about 10,000 vehicles in 2017 but that number should increase as trade barriers and regulations are removed, said administration officials who spoke on condition of anonymity because they were not authorized to speak publicly.
The deal also calls for South Korea to eliminate a number of environmental and “country-of-origin” labeling regulations on U.S. imports that have made it difficult for American-made auto parts to be sold.
And it attempts to give U.S. drug companies equal footing with South Korean firms on the sale of premium pharmaceutical products in the southeast Asian country.
Trump has long decried KORUS as a terrible agreement for the U.S. and blamed former secretary of State — and presidential opponent — Hillary Clinton because the deal was officially ratified on her watch.
“It’s a horrible deal. It was a Hillary Clinton disaster, a deal that should’ve never been made,” Trump said during an Oval Office interview with the Washington Post last year. “It’s a one-way street.”
As part of a strategy to increase U.S. jobs and reduce the trade deficit, the administration also is considering placing higher tariffs on a number of other products, including machinery and aerospace components from China.
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