The Trump administration detailed a trade deal that it reached with South Korea on Monday, which permanently exempts the U.S. ally from newly implemented steel tariffs, but maintains a quota on imports from the country.
The quota on South Korean steel imports is 2.68 million tons of steel per year, or 70% of its annual average sale to the U.S. over the past three years.
In exchange for the exemption, South Korea will open its markets to U.S.-manufactured autos, expanding the number of cars it imports per manufacturer to 50,000, from 25,000.
Meanwhile, the U.S. will extend a tariff on pickup trucks, which was set to expire in 2021, for an additional two decades. The 25% tariff impacts prominent South Korean auto manufacturers, including Hyundai and Kia. South Korea has also been impacted by the Trump administration’s decision in January to impose steep tariffs and quotas on imported washing machines.
On “Fox News Sunday,” U.S. Treasury Secretary Steven Mnuchin called the deal, which had yet to be detailed at the time, an “absolute win-win” for both countries. When asked about Trump’s method of using tariffs as a negotiating tactic, Mnuchin mentioned the agreement with South Korea as an example of how the president’s approach was working.
“I think the strategy has worked, quite frankly,” he said. “So we announced the tariff. We said we were going to proceed. But, again, we said we'd simultaneously negotiate.”
Trump announced a 25% tariff on steel and a 10% tariff on aluminum imports earlier this month, declaring shortly thereafter that countries could apply for an exemption. NAFTA partners Mexico and Canada are exempt, while members of the European Union, along with countries like Brazil, are also expected to be immune.
The revision to the two countries’ trade deal comes as President Donald Trump is set to meet with North Korean leader Kim Jong Un. It also follows an announcement last week that the U.S. will impose tariffs worth $50 billion on a variety of Chinese goods.