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Trump could see trade deficit with S. Korea with 'concern' if reelected: US expert

Feb. 26, 2024 - 10:08 By Yonhap
Wendy Cutler, vice president of the Asia Society Policy Institute and a former negotiator of a South Korea-US free trade agreement, speaks during a meeting with the South Korean press corps in Washington, D.C., on Feb. 22. (Korea Trade-Investment Promotion Agency)

Former President Donald Trump could view America's growing trade deficit with South Korea with "concern" if reelected, a prominent US expert has said, as his campaign proposal for new tariffs has raised worries among nations.

Wendy Cutler, a vice president of the Asia Society Policy Institute and former negotiator of a South Korea-US free trade agreement, made the remarks during a press meeting, noting that Trump continues to place "such a big emphasis on trade deficits."

"What is a bit concerning is during the previous Trump administration, the bilateral deficit with Korea was declining, and I think that was welcomed by the Trump administration," she said during the meeting with the Korean press corps in Washington on Thursday.

"But over the past few years, particularly given our trade in autos and semiconductors, our trade deficit with Korea now is on an upward trajectory. So that is something that could be of concern to the Trump administration if they were to win the election."

Cutler also pointed out that Trump "believes passionately that trade deficits are bad."

"He looks at the fact that if we're buying more from a country than we're selling to them, then that relationship works against our interest, and that we should be in balance with our trading partners," she said.

With victories in all early voting states, including South Carolina on Saturday, Trump has cemented his overwhelming lead in the Republican presidential nomination race to clinch the GOP ticket to face presumptive Democratic Party nominee President Joe Biden in November.

His commanding lead in the intraparty race has led many countries -- even those with free trade agreements with the United States -- to wrestle with a puzzling question about a potential policy shift that Trump could bring about should he return to the White House.

Particularly, his proposal to phase in a "universal baseline tariff" of 10 percent on most foreign products is feared to raise friction with many countries.

"It's just unclear because all (former) President Trump has said so far is 'I plan to impose a 10 percent tariff across the board.' But the question I have (is) does that apply to FTA partners?" she said.

"To be clear, that would violate, in my mind, our obligations under the FTA. That is exactly what you are not supposed to do under a FTA is to arbitrarily increase tariffs among the two partners," she added.

Cutler called attention to the fact that the South Korea-US (KORUS) FTA was renegotiated under the first-term Trump administration.

"They also have a stake in this agreement as well," she said. "They can't blame the past administrations for any shortcomings in the KORUS that they see."

Cutler warned that a new 10 percent tariff on all imports, if imposed, is going to "really wreak havoc on the multilateral trading system."

"I think it will make it very difficult to work with our allies and partners on issues where we want their help and assistance," she said. "I would hope that policy, even though it's being discussed on the campaign trail, would disappear when and if Trump becomes president."

Asked about a hedging strategy to cope with Trump's potential trade policies, she stressed the need to look closely at what tools his administration can use against countries and work on ways to mitigate the impact of those potential measures.

"I suspect that many of our trading partners are talking among themselves about how maybe they could collectively respond to some of the proposals that Trump already has put on the table," she said.

Cutler formerly served as acting deputy US Trade Representative and the chief US negotiator for the KORUS FTA. (Yonhap)