U.S. President Donald Trump tweeted on Friday that he would exempt Australia in addition to Canada and Mexico as he ordered to impose 25 percent and 10 percent tariffs on steel and aluminum imports, respectively. Earlier, U.S. Treasury Secretary Steven Mnuchin indicated in a broadcast interview that there could be additional countries that will benefit from tariff exemptions. As such, attention is focusing on whether South Korea will be added to the list.
Many analysts say that Canada and Mexico are exempted from the new tariffs because they are neighboring countries and because the United States seeks to use the measure as a bargaining chip in the ongoing renegotiations over the North American Free Trade Agreement with the two countries. Australia has been a traditional U.S. ally and only accounts for 0.8 percent of the U.S. steel market, factors that limit actual benefits from imposing the tariff. The decision has also been made apparently by taking into account the fact that Australia has trade deficit with the United States.
South Korea should naturally be included in the list of countries exempt from the tariffs as well. The act that served as basis for the steep tariffs were Section 232 of the U.S. Trade Expansion Act, which was enacted during the Cold War era in 1962. Basically, the provision was meant to impose trade sanctions for acts that pose threat to U.S. national security including transaction of military materials. Economic difficulties are also included among that threats deemed to pose national security, but it is illogical to construe a deficit in the U.S. steel industry resulting from import of Korean steel as threat to U.S. national security.
According to the U.S. trade authority, South Korea has been enlisted in the countries subject to the tariffs because this country is a channel that processes Chinese steel before shipment to the United States. However, the amount of Chinese steel products that are processed in South Korea for export to the world's biggest economy is only 2.4 percent of its overall steel export to the nation. South Korea and the United States are blood-bonded allies that fought in the Vietnam War together, and have maintained a robust security alliance for 65 years since signing the South Korea-U.S. mutual defense treaty in 1953. South Korea is the biggest importer of U.S. weapons along with Saudi Arabia, and is home to the biggest U.S. overseas military base, which is in Pyeongtaek, Gyeonggi Province. Considering the significance of South Korea’s contributions to the United States as an ally, it is rather natural that South Korea be excluded from the nations subject to the tariffs.
The executive order will take effect on March 23, or 15 days after President Trump’s signing. Hence, Seoul does not have much time left to persuade Trump administration officials and politicians. South Korea’s trade team has more roles to play, but its foreign affairs and national security team also has an important role to play in addressing the U.S. tariffs on steel import. Last week, South Korean National Security Office chief Chung Eui-yong asked the White House to exclude South Korea from the countries subject to the new tariffs. Seoul should mobilize all of its diplomatic and trade channels to persuade Washington to exempt South Korea from the new tariffs at a time when the two allies have to closely coordinate runs counter to U.S. economic and national security interest.