The White House reached a tentative “agreement in principle” with South Korea on Tuesday to renegotiate the countries’ existing 2012 trade deal and open the Asian country to more U.S. exports, particularly automobiles.
In exchange, South Korea was granted a limited exemption to the U.S.’s recently enacted steel tariffs.
Administration officials said the deal, details of which had previously leaked, was proof that President Trump’s tariff policy was successfully pressuring countries to open up more on trade. “They are responding,” said a senior administration official.
The deal would double to 50,000 the cap on U.S. auto exports exempted from Korean safety and environmental standards while allowing the U.S. to retain a 25 percent tariff on pickup trucks until 2041. The tariffs had previously been set to expire in 2021. Korea also agreed to relax policies that restrict U.S. pharmaceutical exports and to reduce labeling requirements on U.S. imports.
In return, South Korea’s exports of steel to the U.S. would be exempted from the tariffs. Instead they would be capped at 70 percent of the average export volumes to the U.S. from the last three years, about 2.6 million tons.
The deal also included commitments from South Korea to transparency and accountability regarding currency, though it was unclear how this differed from existing agreements.
Earlier this month President Trump enacted tariffs of 25 percent on steel imports and 10 percent on aluminum arguing it was necessary for national security. However, administration officials also signaled that the tariffs were meant to force concessions from other countries in ongoing trade deals.
