South Korea cut a deal with Trump. It didn't matter.

Yahoo

15 hours ago

In 2018, South Korea handed President Donald Trump the first trade victory of his administration.
Under the agreement, new South Korean steel export restrictions were put in place and more U.S. automakers could export their cars to South Korea.
The president hailed it as "a historic milestone," a "great deal for American and Korean workers" and a "fair and reciprocal" deal. That was probably overselling what amounted to a modest rewrite of a pre-existing trade agreement, but South Korea was happy to play along if it meant buying peace and quiet.
When Trump took office in January, South Korea seemed well-positioned to weather the looming tariffs the president was eager to implement. But it was not to be. Earlier this week, Trump announced he would impose a 25% tariff on South Korean exports starting Aug. 1, unless its government agreed to even more concessions.
The new threat sent a message that resonated far beyond Seoul: Trump can't be trusted.
Foreign leaders have already noticed that nobody is safe from the mercurial temperament of the U.S. president and his endless appetite for tariffs and and a light-switch approach to flipping them on and off. So far in his second term, Trump has broken more trade deals than forged new ones, and the goalposts are constantly moving. The president inked a sweeping deal with Canada and Mexico in his first term, then turned around and launched another trade war earlier this year.
The behavior might earn the 'dealmaker-in-chief' a new nickname: the 'dealbreaker-in-chief.'
On Monday, Trump blasted out letters to over a dozen trade partners threatening to reimpose tariffs on Aug. 1 if they didn't cut new trade agreements. South Korea was among the countries put on notice for a 25% tariff, and more are being posted on social media through the week.
'We invite you to participate in the extraordinary Economy of the United States, the Number One Market in the World, by far,' Trump said in the letter addressed to South Korean President Lee Jae-myung. Notably, the president left wiggle room to adjust the tariffs up or down based on his feelings about the outcome of the negotiations.
It was a far cry from the trade agreement with South Korea in 2007, the U.S.'s first bilateral trade pact with a major Asian power, negotiated over 10 months under the second Bush administration in an environment where free trade was ascendant in both parties. It went into force five years later.
While Washington viewed that deal as key to its approach to the Pacific, the current fight is just one of dozens that Trump has started in recent weeks on large and small nations alike. South Korean officials are working hard to come up with an agreement that would please Trump, but progress has stalled as there's little clarity on what he even wants as the endgame.
'We are doing our best to bring about a result mutually beneficial to both sides, but we have been unable to establish what each side exactly wanted from the other side,' Lee said last week.
While past presidents viewed South Korea as a valuable military ally against North Korea, an isolated totalitarian state that occasionally makes threats against the U.S., Trump sees it as a freeloader taking advantage of incompetent American leadership. In his first term he referred to the updated 2012 trade agreement with South Korea as "a horrible deal" and "a Hillary Clinton disaster" that was a "one-way street."
South Korea will probably have to accept the fact that Trump's idea of a good trade deal is a one-way street in his favor. The Trump administration touted a new accord with Vietnam last week that kept a 20% tariff on Vietnamese imports while clearing the way for U.S. exports to Vietnam to face no import taxes. Stephen Miran, a Trump economic adviser, praised it as an 'extremely one-sided' deal.
But that doesn't mean it's a good deal for the U.S. exactly. After all, it's U.S. companies that will be forced to pay those tariffs. For smaller businesses that have long worked with Vietnamese counterparts to, say, build the furniture that they sell, the trade deal locks in higher prices for the near future and years of hassle as they try to reorient their supply chains.
Trump has brought back mercantilism, the outdated economic theory that a nation's wealth and power were measured by exporting more than it imported. The U.S. and other world powers largely moved away from that model and toward more and more free trade after the Great Depression and World War II, when they realized that trade barriers hurt more than they helped.
Anti-tax conservative activist Grover Norquist summed it up in a discussion of tariffs at an April event with journalist Steve Clemons.
'In trade wars, all the casualties are friendly,' he said. 'Everybody doesn't shoot across World War I trenches at other guys. They shoot down the trench at their own team.'
This article was originally published on MSNBC.com