Trump Inks Revised Trade Agreement with S.Korea, Lighting Hopes for China?
The KORUS trade agreement was implemented since 2012 in the era of Obama, and now, Donald Trump has revamped it for a better deal of both countries.
U.S. President Donald Trump and South Korean President Moon Jae-in has signed a revised free trade agreement on Monday, September 24, 2018, that Trump praised it as a “historic milestone in trade.”
“Our two countries have set an example of friendship and cooperation for trade that rarely you see in this age,” Trump said, and he also added that the agreement would reduce bureaucracy and increase prosperity in the United States and South Korea.
The new version of KORUS agreement has removed a few regulatory burdens for US automakers to export cars, extended a 25% US tariff on imported Korean pickup trucks for an additional 20 years, and lifted a cap on US car exports to South Korea from 25,000 units to 50,000 units. South Korea is now the US’s sixth-largest trading partner.
Moreover, South Korea has agreed to eliminate regulatory barriers for U.S. auto exporters by aligning their environmental testing standards with those of the United States (do not need to meet Korean safety standards). South Korea has also agreed to level the playing field for American pharmaceutical exporters.
Trump said the deal was “fair and reciprocal,” which we all know that he would not strike a deal if it is not a win-win deal, or maybe the least deficit deal.
Will this easy-peasy agreement between the US and Korea spark China to reconsider its trade take with the US after it just backed off on the talk last time? The two countries have been firing tariffs at each other nonstop and no sign that it will stop anytime soon.
The new round of tariffs worth 200 billion dollar of Chinese goods became active yesterday, September 24, 2018, but there does not seem to be any movements from China afterward.
Goldman Sachs has raised the possibility to 60% on the USA to impose tariffs on all Chinese goods. Meanwhile, BIS has warned that if this continues, the global economy is at risk of relapsing the crisis like a decade ago and there is little “medicine” left to treat the patient a second time.