WASHINGTON • United States President Donald Trump secured his first revamp of a US trade deal this week, after reaching an agreement with South Korea that would allow US carmakers greater access to that country's markets, senior administration officials said on Tuesday night.
The agreement came as the US renegotiates the North American Free Trade Agreement with Canada and Mexico, and imposed tariffs that have roiled financial markets.
Under the revamped deal, Seoul has agreed to double to 50,000 the number of cars each US carmaker can sell in the Asian nation without meeting local safety standards, said the officials, who spoke on condition of anonymity.
However, it is not clear how the higher cap will immediately benefit US manufacturers, given that sales by US carmakers currently fall well short of the new limit.
The US will also extend a 25 per cent tariff on pick-up truck imports until 2041. The tariff was set to expire in 2021.
Additionally, South Korea has agreed to limit its steel exports to the US to about 2.7 million tonnes a year, in exchange for relief from the 25 per cent steel tariff Mr Trump announced earlier this month.
Besides the revamped deal, the US Treasury department is also negotiating a side deal on currency issues with the South Korean government, the officials said.
South Korea's trade surplus with the US last year.
South Korea's trade surplus with the US in 2016.
Number of cars each US carmaker can sell in South Korea without meeting local safety standards under the revised trade deal.
New steel exports limit to the US that South Korea agreed to.
The purpose of the side deal will be to secure Seoul's commitment to avoid competitive devaluations of its currency and provide more transparency, such as when the nation's central bank intervenes in foreign-exchange markets.
President Trump has slammed existing trade agreements with several countries, regularly singling out the six-year-old trade deal with South Korea, known as Korus.
The new agreement is Mr Trump's first revised trade pact since taking office.
The South Korean trade ministry said that the new steel quota is unlikely to hurt South Korea's exports, since sales to the US account for 11 per cent of total overseas shipments of the metal.
The quota is set at 70 per cent of the average yearly steel sales to the US from 2015 to last year.
South Korea was one of several countries that received an initial exemption from broad US tariffs on steel and aluminium last week.
South Korean Trade Minister Kim Hyun Chong said the country's tariff exemption was the first granted by Mr Trump on the country level, and officials were still discussing with the US whether it would be permanent or expire after a time.
South Korea's trade surplus with the US was about US$18 billion (S$23.5 billion) last year, down from US$23 billion in 2016, according to the Korea International Trade Association. Cars accounted for more than 70 per cent of the value of the surplus.
Meanwhile, there is no sign that the US is distancing itself from the World Trade Organisation, and negotiations are underway to avert a global trade war, WTO director-general Roberto Azevedo said in a BBC interview broadcast yesterday.
Aside from a series of tariff-raising moves, Mr Trump is also vetoing the appointment of WTO judges, causing a backlog in disputes and threatening to paralyse what is effectively the supreme court of trade.
Asked if the WTO should be thinking about a Plan B without the US, Mr Azevedo told the BBC that he had not heard anything to suggest that such a situation was on the cards.
"I have absolutely no indication that the US is walking away from the WTO," Mr Azevedo said. "Every contact that I have in the US administration assures me that they are engaging."