Sept. 2 (UPI) – President Donald Trump has told members of his administration to prepare to exit a free trade agreement with South Korea, though he has yet to announce whether he will go through with the plan.
A decision could come as soon as this week.
The free trade question comes at a sensitive time diplomatically, with the United States and South Korea working in tandem to counter aggression from North Korea through its development and testing of nuclear weapons and long-range missiles.
Terminating the trade agreement could put a chill on relations with a key ally in the region, though Trump campaigned on ending free trade deals he said cost U.S. jobs and put U.S. businesses at a competitive disadvantage.
South Korea, home to Samsung, Hyundai and Kia among other companies with household names, is a major exporter of electronics and automobiles to the United States. Leaving the bilateral trade agreement, which was signed in 2007 and implemented in 2012, could lead to large tariffs on those goods, increasing the cost to U.S. consumers. In turn, South Korea would be free to increase its own tariffs on U.S. goods.
However, the threat of terminating the agreement could enable U.S. trade negotiators to bargain for more favorable terms, including forcing South Korea to accept more U.S. imports. Trump used a similar threat to Canada and Mexico to force those nations to begin renegotiating the North American Free Trade Agreement, or NAFTA.
Beyond the economic impact, top members of Trump’s national security team have expressed concerns it could divide what is presently a united coalition of nations in the region confronting North Korea over its nuclear program. The North has undertaken a steady stream of missile tests, including launching a missile over Japan this week, an incident that drew strong condemnations from the United States and its allies, including South Korea.
The Washington Post reported Defense Secretary Jim Mattis and national security adviser Lt. Gen. H.R. McMaster are among those in the administration lobbying Trump not to tamper with the trade deal. Trump’s top economic adviser, Gary Cohn, is also opposed to terminating the agreement, the Post said.