Trump Signs New Trade Deal with South Korea
On Monday, President Donald Trump signed a revamped free trade agreement with South Korea at a meeting in New York with President Moon Jae-in.
“From day one, I promised the American people that I would renegotiate our trade deals to ensure that our agreements were fair and reciprocal,” said Trump after the signing. “The new U.S.-Korea agreement includes significant improvements to reduce our trade deficit and to expand opportunities to export American products to South Korea. In other words, we are now going to start sending products to South Korea.”
Trump then gave his pen to President Moon as a sign of appreciation following the signing where Vice President Mike Pence, Treasury Secretary Steven Mnuchin, United States Trade representative Robert Lighthizer, and economic adviser Larry Kudlow were all present.
The new version of the United States-Korea Free Trade Agreement, known as KORUS, “removes a few regulatory burdens for US automakers to export cars, extends a 25 percent US tariff on imported Korean trucks, and lifts a cap on US car exports to South Korea that don’t need to meet Korean safety standards (caps that American automakers weren’t anywhere close to reaching,)” writes Vox.
The original deal signed in 2012, allowed both countries to sell over $60 billion in cars, machinery, and goods with minor restrictions.
However, Trump criticised the deal for being more so in South Korea’s favor, encouraging the country to sell more stuff to the U.S. versus the U.S. selling to South Korea.
“From day one I promised the American people that I would renegotiate our trade deals to ensure that our agreements were fair and reciprocal,” said Trump.
In 2016, the U.S. had $27 billion in a trade deficit with South Korea, which is significant but it still a fraction of the $69 billion trade deficit with Japan and the $579 billion with China.
American automakers claim that this is partly due to car sales. American-made cars aren’t as popular with South Koreans.
“In 2016, Americans imported $16 billion worth of Korean cars — about 10 times more than the $1.5 billion South Koreans spent importing American cars. Auto industry experts say the reason for this is pretty simple: Americans love Hyundai and Kia cars much more than South Koreans love Chevys and Fords,” writes Vox.
Trump believes the deal will inspire U.S. imports to South Korea.
“We are now going to start sending products to South Korea,” said Trump. “These outcomes give the finest American-made automobiles, innovative medicines and agricultural crops much better access to Korean markets.”
The deal has been extended to 2041 and still has to get approved by the South Korea parliament.
But South Korea was quick to agree to the revised KORUS because the country is hoping to have U.S. support when it comes to keeping the peace with North Korea.
Author’s note: Trump promised on his campaign trail to renegotiate trade with each country to make deals that put America first. This is a major deal because we do a lot of trade with South Korea, not as much as with China but there is still a $27 billion trade deficit that needs to be reduced. This deal will help to balance it out.
Editor’s note: As mentioned, this is not the most important or impactful trade deal that Trump is negotiating. But it shows that Trump does complete his negotiations and that he truly wants fair deals. It has been said by many that America can compete with any country in the world, as long as the playing field is level. I think Trump believes that.