Trump preparing to leave South Korea trade deal

Top aides oppose move during North Korea nuclear crisis.

WASHINGTON — President Donald Trump has instructed advisers to prepare a withdrawal from the United States’ free-trade agreement with South Korea, several people close to the process said, a move that would stoke economic tensions with the U.S. ally at a time both countries confront a crisis over North Korea’s nuclear weapons program.

While it is still possible Trump could decide to stay in the agreement in order to renegotiate its terms, the internal preparations for terminating the deal are far along and the formal withdrawal process could begin as soon as this coming week, said the people, who spoke on condition of anonymity.

A number of senior White House officials are trying to prevent Trump from withdrawing from the agreement, including national security adviser H.R. McMaster, Defense Secretary Jim Mattis, and National Economic Council Director Gary Cohn, these people said.

A White House spokeswoman said “discussions are ongoing, but we have no announcements at this time.”

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.

If Trump withdraws from the agreement, he could try to force South Korea to import more U.S. products with little to no import restrictions, something he believes will help U.S. companies and workers.

South Korea could also decide to refuse any discussions with Trump, kicking off a trade war between the countries.

The trade agreement was signed in 2007 and went into effect in 2012.

Withdrawing from the deal could lead to a large increase on tariffs levied against products the United States imports from South Korea, such as electronics, cellphones and automobiles. South Korea would probably move quickly to raise its own tariffs against U.S. products, and it could also decide to raise tariffs on its imports of U.S. agriculture products.

In July, U.S. Trade Representative Robert E. Lighthizer revealed some of Trump’s complaints with the South Korea deal during a “special session” that was called in an attempt to begin renegotiations.

Lighthizer said at the time that since 2012, the U.S. “trade deficit in goods with Korea has doubled from $13.2 billion to $27.6 billion, while U.S. goods exports have actually gone down. This is quite different from what the previous administration sold to the American people when it urged approval of this agreement. We can and must do better.”

South Korea is the sixth-largest goods trading partner with the United States, accounting for $112.2 billion in two-way trade last year, according to the U.S. trade representative.