The US President has finalised his first major trade deal since taking office, signing an agreement with South Korea's Moon Jae-in on the eve of the United Nations General Assembly meeting.
Trump said the revised trade terms were a “very big deal” and “a great day for the United States and a great day for South Korea”.
Speaking at the United Nations headquarters in New York, Trump predicted the new deal would help reduce the trade deficit between the countries as well as opening up new opportunities to export US products into South Korea, with US pharmaceuticals, agricultural products and vehicles all gaining more access to Korean markets.
The US President also forecast it would be the first of many new bilateral deals.
— Donald J. Trump (@realDonaldTrump) September 24, 2018
New terms for US vehicles, agricultural products
The new deal will open up the market for Korean imports of US vehicles while allowing the US to continue imposing a 25% tariff on Korean trucks until 2041.
The US also agreed to exempt some South Korean steel from the 25% tariffs Trump had imposed in March, with 70% of the country’s average imports from 2015-2017 now exempt.
The agreement also has implications for the agricultural goods market. “I think our farmers are going to be extremely happy,” Trump said. “It was very limited as to what they could do and what they could send. And now it’s a open market, and they’re going to be sending a lot more farm products. That makes me feel very good. I love our farmers”.
Moon said that “companies from both countries will now be able to do business under more stable conditions”.
“I’m hopeful that this will provide us with a platform upon which our bilateral economic ties will be elevated to a higher level in a freer, fairer, and more mutually beneficial direction”.
Donald Trump hails South Korea trade deal https://t.co/RE71ZGwYv8
— BBC News (UK) (@BBCNews) September 24, 2018
Analysts uncertain the deal will address the trade balance
Almost US$155 billion goods were exchanged between the US and South Korea in 2017, making it the sixth-largest trading partner of the US, though Trump has been increasingly concerned at the trade deficit.
“It hardly seems like it will have an impact,” trade policy expert Simon Lester told Vox, “I think (the Trump administration) needed to declare a victory, to just do something and sell it as a win.”
Trump seals his first major trade deal, a revamped pact with South Korea, spurring hope for China and Nafta agreements https://t.co/o9WPksRSWV
— Bloomberg (@business) September 24, 2018
Some of the terms in the new deal appear to be purely cosmetic. While the new deal doubles the number of US automobiles that may be exported to South Korea while avoiding red tape, no US automaker came close to reaching the old cap.
Wendy Cutler, a Vice-President at the Asia Society Policy Institute, said the new deal “doesn’t seem to change the agreement dramatically”.
“I view this as a win-win deal, some solid improvements,” she said, “but nothing dramatic.”
After the two leaders had addressed the press, they moved to a nearby table to sign the trade agreement.
“I’ve never seen my name in Korean. It looks nice,” Trump said.