U.S., South Korea Agree to Mildly Revised Trade Pact

South Korea and the U.S. have agreed to largely symbolic updates to their bilateral trade pact that will leave auto shipments untouched but impose quotas on Korean steel shipped to the U.S.

Negotiators agreed that the U.S. may continue to levy a 25% import tax on imported pickup trucks until 2041. The tariff had been scheduled to disappear in 2021 under the existing trade agreement, which is nicknamed KORUS. The extension has no immediate impact, since Korea doesn’t currently ship trucks to the American market.

U.S. carmakers will be able to double to 50,000 the number of vehicles each company may ship annually to Korea without modifying them to conform to Korean safety rules. That change also is symbolic, because no carmaker has come close to the current 25,000-unit cap. Korea’s trade ministry notes that General Motors and Ford each shipped fewer than 10,000 vehicles to Korea in 2017.

Korea says it also will consider accepting U.S. vehicles that fall short of Korea emission standards for 2022-2025. The U.S. is widely expected to ease its own standards for that period.

Separately, the tentative KORUS updates would cap Korean steel shipments to the U.S. at 70% of their average volume in 2015-2017. Korea’s trade ministry estimates the quota at 3 million tons (2.7 metric tons) per year. In exchange, Korea will receive an indefinite exemption on the 25% steel tariff announced by President Donald Trump last week.