Speed Reads

Trump and Trade

The White House announces its revised trade deal with South Korea

On Tuesday eveninig, White House officials announced that the Trump administration had successfully renegotiated the six-year-old South Korea-U.S. trade agreement (KORUS), giving President Trump his first major trade deal since being elected. In return for exemption from Trump's 25 percent tariff on steel imports and 10 percent tariff on aluminum, South Korea agreed to limit its U.S. steel exports to 2.68 million tons a year, or roughly 70 percent of its average exports from 2015 to 2017; allow twice as many U.S.-made cars, 50,000 per manufacturer, into Korea without meeting local safety standards; and extend for 20 years a 25 percent tariff on South Korean pickup trucks exported to the U.S. The Trump administration also said it was wrapping up a nonenforceable side deal to deter currency devaluations by South Korea.

An unidentified senior administration official told reporters that the "historic" agreement in principle "is visionary and innovative, and it underscores a pattern of failure by previous administrations to negotiate fair and reciprocal trade deals." Trump had threatened to rip up KORUS if South Korea did not renegotiate, and the threatened steel tariff provided another carrot and stick for U.S. negotiators. It's not clear Trump's "America First" strong-arm tactics will work with larger trading partners like China, Canada, and Mexico. And not everyone is as impressed as the White House with the deal.

For example, Ford and General Motors sent fewer than 10,000 cars each to South Korea last year, well short of the new 50,000 cap, and no Korean company currently exports pickup trucks to the U.S. "The expanded quota on autos allows in cars we don't want to ship," Phil Levy, a senior economist in President George W. Bush's White House, tells The Washington Post. "The extended tariff on trucks blocks pickups the Koreans are not exporting. And the limitation on Korean steel exports will make life more difficult for all the U.S. manufacturers who use Korean steel. ... In what way does this help?"