Record-breaking USA trade deficits with Korea have become the new normal under the FTA - in 59 of the 60 months of KORUS' first five years, the US goods trade deficit with Korea has exceeded the average monthly trade deficit in the five years before the deal.
Seoul on Monday announced a deal to limit exports to the us of South Korean steel, while extending high USA tariffs on any possible South Korean pickup trucks and increasing USA automakers' access to the Korean market.
It's unclear how the proposed changes to the pact itself would reverse the doubling of our Korea trade deficit under KORUS, but the new currency agreement could make a difference if it has teeth, delaying the US tariff cuts on Korean trucks could stop the big imbalance from getting even worse and the parallel steel agreement is significant.
The new deal doubles - to 50,000 - the cars each United States automaker can export annually to South Korea, reduces bureaucratic barriers to American products and extends a 25 percent USA tariff on South Korean pickup trucks until 2041.
One official declared that "the President was correct to undertake this renegotiation". Korean aluminum producers would still be subject to Trump's 10 percent tariff on aluminum.
However, it has been suspending the duties on allies like the EU, Canada and Mexico.
Unions at South Korea's two-largest automakers, Hyundai Motor Co. and Kia Motors Corp., have already blasted the new agreement for blocking access to the fast-growing USA pickup truck market.More news: Weather: Drop in temperature, scattered rain expected
South Korea's trade ministry announced changes to the trade pact on Monday during a briefing in Seoul, calling the discussions "heated" but ultimately successful in eliminating "two uncertainties". While the plan had limited additional funds for innovative drugs to Korean companies, it will include higher payments for innovative American-made drugs as well starting this year. These premium payments have previously only been available to the South Korean companies.
Numerous fixes are aimed at gaining access for USA automakers, which accounts for a huge share of America's $33 billion annual trade deficit with South Korea.
The amendments do not directly address some major trade issues between the two countries, including agriculture.
South Korea has been kept on a Treasury currency "monitoring list" due to its large global current account surplus and U.S. trade surplus.
Under this approach, Congress does not have to approve the final agreement between the United States and South Korea.
Rep. Terri A. Sewell, D-Ala., told Lighthizer she and other members of Congress anxious that changes to KORUS could have financial repercussions in their districts. "And we obviously would want to be kept abreast and in the loop as to the changes that are going to be made and as to our consideration as to how it will affect our districts".
The White House announcement comes as the Trump administrations is using the threat of tariffs to try to leverage better trade deals with key economic partners, while also trying to increase pressure on China to make concessions. Free Trade Agreement, known as KORUS, a day after Korean Trade Minister Kim Hyun-chong announced the move. Envoys from Seoul and Washington have been holding talks to renew the deal for months.