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March 26, 2018

U.S. Gets New Trade Deal with South Korea But Ag Not Part of Deal

 |  By: Jim Dickrell

The United States got its first trade deal negotiated after President Trump imposed tariffs on steel and aluminum today, reports the New York Times. The deal came with South Korea, but did not open ag markets any further.

The agreement with South Korea did not come as a surprise because the Trump Administration had warned ag interests that it would be limiting the negotiations to a narrow range of products. The Administration wanted the negotiations to be very focused, and not include a range of products that could make the talks problematic, says Jaime Castaneda, Senior Vice President, Trade Policy for the National Milk Producers Federation and the U.S. Dairy Export Council.

“We knew almost from the start that they weren’t going to do anything on agriculture,” he says.

Most ag products were already duty free except for a few products here and there. Those were negotiated in a free trade agreement signed with South Korea in 2010, which had opened up the market considerably to U.S. dairy products, says Castaneda. “We’re going forward on duty-free over a period of years on every product but skim milk powder (SMP),” he says. “Even though the tariffs aren’t zero on SMP, we got a really good quota that never stops growing.”

The one trade area of concern, however, is negotiations with China. It’s a wait-and-see game on how China will react, and on which products it ultimately decides to add tariffs. The U.S. exports whey powder, lactose and cheese to China, with cheese sales growing rapidly. Even without an agreement, USDEC had created partnerships and relationships with the Chinese to expand those exports.

Castaneda says the Chinese will react to the U.S. tariffs on steel and aluminum. “They will hit back, but how hard is the question,” he says.