Terminating FTA would cost Americans $4.6 billionTerminating the free trade agreement between Korea and the United States (KORUS-FTA) would cost American consumers $4.6 billion annually, a study showed Thursday.
The report by the National Foundation for American Policy comes as the two sides have yet to sign the revised version of the FTA, which went into effect in 2012.
The deal was renegotiated in March after U.S. President Donald Trump threatened to pull the United States out of it. He claimed the treaty was taking away American jobs and widening the U.S. trade deficit with Korea.
Despite the amendments, which included a further opening of Korea’s auto market to the United States, the revised deal has been in limbo amid uncertainty about the Trump administration’s move to impose tariffs on imported cars. Seoul, an exporter of cars and car parts, has said such tariffs would make the updated agreement “meaningless.”
Should the United States still decide to abandon the deal, the loss to American consumers would be greater than the benefit to U.S. producers, according to the study.
“We find that ending the KORUS-FTA would cost U.S. consumers $4.6 billion annually and $22.8 billion over five years,” it said, noting the assumption that in the absence of the deal, the price of competing domestically produced goods would increase 10.7 percent due to the tariffs on Korean imports under the World Trade Organization’s Most Favored Nation status.
On the assumption that Trump imposes 25 percent tariffs on the $73 billion in goods the U.S. imports from Korea, “the damage to households would be substantially greater.”
“A 25 percent tariff on all imports from Korea would cost the typical U.S. household $916 over five years,” the report said.