Trump "Playing With Fire" on Trade With South Korea

US-President Donald Trump, left, shakes hands with South Korean President Moon Jae-in, right, next to Trump's wife Melania, prior to a concert at the Elbphilharmonie concert hall on the first day of the G-20 summit in Hamburg, northern Germany, Friday, July 7, 2017. (Christian Charisius/Pool Photo via AP)

US-President Donald Trump, left, shakes hands with South Korean President Moon Jae-in, right, next to Trump's wife Melania, prior to a concert at the Elbphilharmonie concert hall on the first day of the G-20 summit in Hamburg, northern Germany, Friday, July 7, 2017. (Christian Charisius/Pool Photo via AP)

US-President Donald Trump, left, shakes hands with South Korean President Moon Jae-in, right, next to Trump’s wife Melania, prior to a concert at the Elbphilharmonie concert hall on the first day of the G-20 summit in Hamburg, northern Germany, Friday, July 7, 2017. (Christian Charisius/Pool Photo via AP)
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The Washington Post reports that, against the advice of many of his advisers, President Trump has instructed his aides to prepare to withdraw from the United States-Korea Free Trade Agreement (aka KORUS FTA). The formal withdrawal could come as soon as this week. If Trump goes through with this it will mean higher prices on consumer goods and fewer jobs for Americans.

Before KORUS, South Korea had higher tariffs on imports from the US than the US had on imports from South Korea; ending the deal would mean returning those tariffs to status quo ante levels.

Perhaps Trump is floating withdrawal to scare Seoul into renegotiating the deal to save it, but he doesn’t seem to realize what a weak hand he holds, or what an awful time this is to be picking a fight with Moon Jae-in, the recently-elected South Korean president. From the Post:

Trump is “playing with fire,” said Gary Schmitt, co-director of the Marilyn Ware Center for Security Studies at the American Enterprise Institute. “There is a new president in South Korea whose instincts probably are to be probably not as pro-America as his predecessor and now you are putting him in situation where he has to react. In fact, what you need now is as much cooperation as possible.”

One reason top White House advisers are trying to stop Trump from withdrawing from the South Korea free trade agreement is because they do not want to isolate the government in Seoul at a time when North Korea has become increasingly adversarial with its missile program, testing nuclear weapons and firing missiles over Japan in a way that has alarmed the international community.

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On everything from imposing sanctions to deploying military assets, the state of play with North Korea calls for a tougher approach than Moon is likely to be inclined toward, and a fight over trade will make the politics more difficult for Moon’s center-left government. Even if the geopolitical problems are surmountable (frightening behavior by Pyongyang does seem to have nudged Moon away from the posture of accommodation he’s called for in the past), the economics of upending KORUS are horrible. We can only hope that President Trump’s smarter advisers will convince him to reconsider.

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