SEOUL: The United States has agreed to exempt South Korea from steel tariffs, South Korea’s trade ministry said on Monday, instead of imposing a quota on steel imports as the two countries renegotiate a trade deal sharply criticized by US President Donald Trump.
South Korea had meanwhile agreed to give ground on automobile trade regulations by agreeing to changes in the bilateral free trade deal known as KORUS, the ministry said.
In April, Trump told Reuters he would either renegotiate or terminate what he called a “horrible” trade deal that has doubled the US goods trade deficit with South Korea since 2012.
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The agreement means South Korea becomes the first US ally to receive an indefinite exemption, albeit with quota, on steel tariffs imposed by Trump, a move that had fuelled concerns of a damaging global trade war.
Last week, Trump temporarily excluded six trade partners, including Canada and Mexico, Australia and the European Union from higher US import duties on steel and aluminium which came into effect on Friday.
The import duties, of 25 per cent on steel and 10 per cent on aluminium, were mainly aimed at curbing imports from China.
South Korea has received a quota of about 2.68 million tonnes of steel exports, or 70 per cent of the annual average Korean steel exports to the United States between 2015-2017, which will be exempt from the new tariffs, the ministry said in a statement.
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South Korea is the third-largest steel exporter to the United States and the world’s top importer of Chinese steel, leading to concerns it was a conduit for China’s excess capacity.
Shares in South Korean steelmakers rose sharply on Monday, with Dongbu Steel leading gains, on expectations of tariff exemptions.
South Korea’s steel association said in a statement it was a “relief” that South Korea has been excluded from US steel tariffs, but it was regrettable it was unable to secure more quotas for steel exports.
South Korea’s steel industry will “try to pave the way to ease US restrictions on steel exports,” the association said in a statement.
South Korea and the United States also agreed that US tariffs on Korean pickup trucks will be in place until 2041, extended by 20 years from the previous phase-out schedule of 2021.
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