President Trump, after repeatedly threatening to pull out of the free trade agreement with South Korea (KORUS), instead signed an extension and revision of the agreement. On Monday, during a bilateral meeting ahead of the UN talks on Tuesday, the leaders of the two countries officially agreed to the new deal
In exchange for South Korea being exempted from the 25% import tariff on steel, they accepted a quota limiting their exports to 70% of the current sales.
South Korean trucks extend a 25% tariff, but cars are not affected. The current 25,000 car per year limit on American companies importing to South Korea will be raised to 50,000 cars per year.
The car limitation was a key focus of the Trump administration, and having it lifted was a clear win for them. The Trump philosophy on trade calls for a minimization of trade imbalances, and the outsized sale of Korean cars into the US vs. the sale of US cars into Korea is a key factor in the trade deficit with South Korea.
There are questions about what the practical value of that clear win is, however. No American car company is currently selling in numbers that approach their South Korea limit. Ford, combined with it subsidiary Lincoln, is the American company with the strongest footprint on their market… and it sold less than 12000 cars in 2016, less than 11000 cars in 2017 and is on pace to sell less than 11000 in 2018.
An ancillary result of the meeting between Moon and Trump was the announcement by the President on his relationship with the murderous North Korean dictator Kim Jong Un.
“We’ve made more progress than I think anybody’s made in ever, frankly, with regard to North Korea,” Trump said. “The relationship is very good. In fact, in some ways it’s extraordinary.”
He said a second summit with Kim will happen in the “not too distant future” and that more information will come in a “pretty short period of time.”