U.S. and South Korea Strike Trade Deal

. Treasury Secretary Steven Mnuchin said the U.S. expected to sign the agreement with South Korea soon. By Todd Horwitz, Bubba Trading.

 

LET’S MAKE A DEAL

U.S. and South Korea Strike Trade Deal

The U.S. and South Korea agreed to amend their free-trade deal to address American concerns about a growing deficit and resolve friction over tariffs on South Korean steel, Seoul’s trade ministry said in a statement Monday.

The changes to the deal, which have been blamed by President Donald Trump for expanding the U.S. trade deficit, focus on rebalancing trade in the auto sector—a major source of South Korea’s trade surplus with the U.S., the ministry statement said. Speaking on “Fox News Sunday,” Treasury Secretary Steven Mnuchin said the U.S. expected to sign the agreement with South Korea soon.

Trump had been hugely critical of the existing trade deal between the two countries, slamming it as “horrible” and threatening to yank the United States out of it altogether. That raised fears of a damaging dispute that could drive a wedge between the United States and one of its closest allies in Asia. South Korea is the United States’ sixth-biggest trading partner.

But after starting talks in January to renegotiate the deal, which is known as Korus, the two sides have now reached agreement on the key points, according to top officials from both countries. Despite Trump’s threats, South Korea appears to have emerged from the talks “unscathed,” said Krystal Tan, an Asia economist at research firm Capital Economics. “The concessions that Korea has agreed to will have a very small impact on its economy,” she wrote in a note to clients.

Under the new terms, South Korea would double the import quota for American-made cars that meet U.S. safety rules—but not Korean ones—to 50,000 from 25,000 per U.S. car maker each year, the statement said. And South Korea will now allow the U.S. to keep its 25% tariffs on pickup trucks in place for 20 more years. The truck tariffs had been set to expire in 2021. In return, the U.S. agreed to give South Korea a permanent exemption from 25% import tariffs on steel. South Korea had been temporarily excluded from the metals tariffs

Keep those stops tight
Todd “Bubba” Horwitz

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About the author

Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.