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Trump Undermines His Own South Korea Trade Deal With New 25 Percent Tariffs

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If you still believe there is some overarching goal—new trade deals, negotiating for lower trade barriers, or whatever—to the Trump administration’s trade policy agenda, Monday’s announcement of new tariffs targeting imports from South Korea ought to put an end to all that.

South Korea was not the only country whose goods were hit with higher tariffs on Monday, nor does it seem likely to be the last. President Donald Trump also announced higher tariffs targeting imports from Japan, Myanmar, Laos, South Africa, Kazakhstan, and Malaysia. The White House indicated that Trump will be sending letters to other countries in the coming days announcing various tariff rates. This is, in effect, a slow-motion repeat of the “Liberation Day” tariff announcements that were put on hold for 90 days in early April after the markets reacted negatively to those announcements.

Still, tariffing imports from South Korea, America’s sixth-largest trading partner, is particularly galling. If Trump’s goal here is to strike deals that will lower foreign barriers to American exports and deliver better trading conditions for American manufacturers (who rely on imports), then hiking tariffs on South Korea makes startlingly little sense.

For starters, that’s because the new tariffs seem to violate an existing trade deal between the U.S. and South Korea. That deal, the U.S.-Korea Free Trade Agreement, was signed in 2007 by President George W. Bush and implemented in 2012. Under the terms of the deal, about 95 percent of the goods traded between the two countries are imported tariff-free. Among other things, that deal put an end to high South Korean tariffs on American cars and light trucks, which has boosted American exports and U.S. auto manufacturing jobs.

On the whole, the deal has been good for both countries. Bilateral trade between the U.S. and South Korea expanded nearly 70 percent in the first 10 years that the deal was in place. As The Heritage Foundation noted in 2022, the deal was particularly good for American farmers (who saw exports to South Korea hit record highs) and for foreign investment in American industries (South Korean investment in the U.S. nearly tripled during the deal’s first decade in force).

Some Trump allies might argue that the current president has no obligation to respect deals signed by the Bush administration. That’s silly, of course, since incoming presidents are expected to respect trade deals made by their predecessors. Indeed, if not for that expectation, trade deals would provide little long-term certainty for businesses in either country, as they could always be voided after the next election.

It’s also silly because Trump himself signed a renegotiated version of that same trade deal in 2018. The so-called KORUS 2.0 rolled back some of the free trade provisions in the original deal—most notably, it limited exports of Korean steel to the U.S. and postponed a planned elimination of the U.S. tariff on imported light trucks.

Still, it was mostly “a minor tweak” to the previous deal, as the Cato Institute termed it at the time.

Trump called the reworked deal “fair and reciprocal” and said it was “a historic milestone in trade.”

Now, less than seven years later, he’s effectively torn up that deal. Or he’s pretending that it never existed (or he forgot about it).

So, here’s the question: What is the White House hoping to accomplish with this latest maneuver?

If the goal is to lower tariffs across the board, then KORUS already did that. If the goal is to increase American exports to foreign countries by getting them to lower their trade barriers, then KORUS has already done that too. If the goal is to allow Trump to renegotiate the supposedly flawed trade deals from previous generations of American leaders, then KORUS 2.0 did that.

And, of course, if the goal is to strike more deals with more countries—as the White House keeps claiming—then this seems to be a step in the wrong direction. What other leader will be willing to negotiate seriously with this administration, knowing full well that it does not respect the deals it reaches?

The post Trump Undermines His Own South Korea Trade Deal With New 25 Percent Tariffs appeared first on Reason.com.


Source: https://reason.com/2025/07/07/with-new-25-percent-tariffs-trump-just-blew-up-his-own-trade-deal-with-south-korea/


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