Trump’s Trade Plan Threatens to Derail Korean Security Talks

WASHINGTON — President Donald Trump’s plan to impose stiff steel tariffs would severely punish South Korea, a key diplomatic ally and a major exporter of the metal to the United States, at a moment when America is embarking on a series of high-stakes negotiations to defuse tensions on the Korean Peninsula.

North Korea has said that it is willing to begin talks with the United States about abandoning its nuclear weapons, officials from the South said Tuesday, opening the possibility for a breakthrough in one of the world’s most prolonged security stalemates.

If talks materialize, the United States will need the close partnership of South Korea. But in recent months, the Trump administration has alienated the South’s leaders by initiating a series of tough trade measures that seek to penalize the country for exporting more goods to the United States than it imports.

The administration has begun renegotiating its 6-year-old free trade agreement with South Korea, a pact that Trump criticized as a “horrible deal” for the United States. In January, the president levied tariffs against foreign washing machines and solar panels, both major Korean exports.

Last week, the president announced that he planned to impose tariffs of 25 percent on steel and 10 percent on aluminum on imports from all countries. That penalty would fall heavily on South Korea, which is the third-largest exporter of steel to the United States after Canada and Brazil.

“In terms of security issues, this is the time when there should be no daylight between the United States and South Korea, and a time when we should not even be thinking of adding any potential friction to our relationship,” said Wendy Cutler, the vice president of the Asia Society Policy Institute and a former negotiator for the United States trade deal with South Korea. “That’s what these measures do.”

The proposed tariff has rankled allies and shaken economic and security relationships around the globe. It has also put other trade goals, like combating unfair practices from China, at risk. After the tariff announcement, the European Union threatened to cancel a meeting over the weekend with the U.S. and Japan to discuss efforts to counter China on trade. The plan has also provoked a sharp backlash from members of the president’s own party and industries that could be hurt by rising prices as a result of the tariffs. In the days since the announcement, opponents have fiercely lobbied the administration to abandon or scale back the measure.

“There is a lot of concern among Republican senators that this could sort of metastasize into a larger trade war,” Sen. Mitch McConnell, R-Ky., the Senate majority leader, told reporters at the Capitol on Tuesday. “Many of our members are discussing with the administration just how broad, how sweeping, this might be.”

The president has said there may be exceptions. On Monday, he floated the idea of exempting Canada and Mexico if the countries made concessions in a renegotiation of the North American Free Trade Agreement.

At a news conference on Tuesday, the president said the EU could be exempted if it removed some of the “horrible barriers” that prevent American products from entering its market. “Otherwise, we’re going to leave it as it is,” Trump said, referring to the tariff plan.

Yet some trade advisers say the administration is unlikely to consider such an exemption for South Korea, which several officials in the White House see as one of biggest global culprits in trade.

That view has stunned the South Korean government, which is used to working closely with the United States on economic and security matters. The U.S. maintains a large military presence in Seoul, the capital, and it has been a partner on issues like the North Korean nuclear threat and balancing against China’s rise in the Pacific.

Against the advice of many economists, the Trump administration sees the trade deficit with South Korea as a sign that the United States is on the losing end of their economic relationship. That is the major reason U.S. officials have started to renegotiate the U.S.-Korea Free Trade Agreement. Cutler said the proposed tariffs would make “what was already a complicated negotiation extremely complicated.” She said it would be “almost politically impossible” for the South to agree to the United States’ demands if it is not treated like other allies, including Canada and Europe.

The U.S. trade representative, who is carrying out the negotiations, has not asked Congress for the permissions needed to make significant changes to Washington’s side of the bargain. Trade experts suggest that this means that U.S. negotiators are pushing for a large overhaul from the South, while refusing to offer any significant concessions in return.

Though some U.S. industries have profited from access to South Korea’s market, especially agriculture, the Trump administration has pointed to a ballooning trade deficit since the pact was signed to argue that it is a bad deal. Much of that $22.9 billion trade deficit in goods is because of the import of automobiles, like Hyundai and Kia, a major focus of the deal’s renegotiation.

The administration has blurred the lines by explicitly linking its trade agenda with national security goals. It previously said that it had declined to name China a currency manipulator, one of Trump’s campaign promises, in the interest of having Beijing help pressure North Korea to freeze its nuclear program.

“This is not at all helpful to one of the world’s most delicate negotiations,” said Christopher R. Hill, who negotiated with North Korea for the George W. Bush administration. “Going after their steel exports at this time is by no means ideal.”

The White House’s economic threats could even backfire by boxing in President Moon Jae-in of South Korea. The industrial conglomerates that control the South’s steel industry are powerful and politically influential. To satisfy his constituents, Moon may have to present a tough front, making it difficult for him to make concessions to Trump.

Chad P. Bown, a senior fellow at the Peterson Institute for International Economics, estimated that the steel and aluminum tariffs would cost South Korea $1.1 billion in trade. The consequences for China, which the administration says is at the root of a damaging global glut of cheap steel, would only be $689 million, Bown said.

The tariffs could also hurt the South’s economy in other ways, trade experts say. Steel that does not enter the United States will flood into other markets, most likely creating more competition and lowering prices for steel-makers around the world. The EU has already said it could impose “safeguard” restrictions to stop that potential wave of diverted steel from flooding into its markets.