Trump Secures Trade Deal With South Korea Ahead of Nuclear Talks

Through the agreement, South Korea — the third-biggest exporter of steel to the United States in 2016 — is permanently exempt from the White House’s global tariffs of 25 percent on steel. In return, South Korea agreed to adhere to a quota of 2.68 million tons of steel exports to the United States a year, which it said was roughly equivalent to 70 percent of its annual average sent to the United States from 2015 to 2017.

The deal also doubles the number of vehicles the United States can export to South Korea without meeting local safety requirements to 50,000 per manufacturer. However, trade experts said that American companies had not come close to meeting their existing quota last year, and that American carmakers had not done enough to tailor their products for South Korean consumers, who prefer smaller vehicles. The revised agreement does ease environmental regulations that American carmakers face when selling vehicles in South Korea and makes American standards for auto parts compliant with South Korean regulations.

Importantly for the Trump administration, the agreement extends tariffs on imported South Korean trucks by 20 years to 2041. Those tariffs were set to phase out in 2021, which officials said would have harmed American truck makers.

The deal will also establish a side agreement between the United States and South Korea that is intended to deter “competitive devaluation” of both countries’ currencies — which can artificially lower the cost of imports bought by consumers — and to create more transparency on issues of monetary policy. Administration officials suggested that this new type of arrangement was likely to be replicated in other trade deals, though they acknowledged that it was not enforceable.

Senior White House officials trumpeted the addition of the currency provision to the negotiations, which would seek to prevent South Korea from reducing the value of its currency to make its goods cheaper abroad and export more to the United States. In a report published in October, the Treasury Department declined to label South Korea a currency manipulator, but placed it on a “monitoring list” for its currency practices and large trade surplus with the United States.

However, the effect of the currency agreement may be mostly symbolic, since it was signed in a side deal to the pact to avoid a lengthy legislative approval process. Unlike other provisions of the official agreement, the currency provision is not enforceable through panels that typically settle disputes, or through officially sanctioned retaliation, the usual method for policing trade deals.

The Obama administration had fought for a similar currency provision to be included in the Trans-Pacific Partnership.

On automobiles, the biggest source of trade tensions between the countries, the negotiation delivered modest victories that were likely to be welcomed by American carmakers who have long sought to sell more cars in South Korea. It also smoothed customs and regulatory procedures that American businesses say have made it harder to sell goods in the country.

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