Recently, the Trump administration and South Korea agreed to a trade agreement. The trade agreement exempts South Korea from the recent 25 percent tariffs that the Trump administration recently enacted. Yet, South Korea will reduce its steel imports to the United States by 30 percent. However, South Korea is the third largest steel exporter for the United States behind both Brazil and Canada. Moreover, South Korea will still be impacted by the aluminum tariff as the trade deal fails to mention a solution for this product.
The Trump Administration trade advisor Peter Navarro insisted that “in the case of South Korea, this is absolutely a home run…in lieu of tariffs on steel, we have a quota which is equal to only 70 percent of their shipments from the last few years.” However, Navarro did express that the deal will in the same sense have the same affectability as the current regiment of tariffs. Likewise, Navarro also mentioned that he believes that other countries understand that any potential trade pacts agreed to with the United States those countries understand that instead of the tariffs they will be given a quota to export to the United States.
This United States also hopes that the deal with the South Koreans will ultimately lessen the United States trade deficit with them. The deal supposedly does so by providing lifts to trade barriers in South Korea, and imposing novel barriers here in the United States. Likewise, in addition to the cap on steel imports the agreement extends a tariff on imported pick-up trucks for an additional two decades. Thus this effectively locked out all imported pick-up trucks from South Korea from touching United States roads. Yet, the pact also aims to make it easier for US automakers to sell their products in the South Korean market by “lifting what the administration calls “burdensome regulations.” Yet, it has been known that the United States automobile industry has not particularly focused on the Korean market due to it being viewed as a non-opportunity situation.
Moreover, the Trump Administration has taken a 180-degree turn around from the norm when dealing with the trade issue. This is because under normal presidencies the goal is to reduce the foreign barriers to level the playing field. Yet under the Trump administration they believe that instead of opening the South Korean market to the United States’ products it took a more protectionist route in that they worked toward a higher and long-lasting protectionist policy for its domestic automobile industry.
In addition, to this agreement the treasury department is negotiating a separate deal to make sure that South Korea does not participate in currency manipulation. Likewise, the Trump Administration plans on activating these same quotas on steel imports with other allies voiding the 25 percent tariff on those countries. Moreover, the Trump Administration has stated that America is open for business with others, but due to those countries higher barriers against the United States they have voiced that the United States will increase our barriers if those are not lowered.