REFILE-UPDATE 1-US agrees to exempt S.Korea from steel tariffs, but imposes import quota - S.Korea

import quota - S.Korea@ (Refiles to correct media packaging slug. No change to text)

* US imposes steel import quota of 70 pct of 3-yr average

* South Korea is 3rd largest steel exporter to US

* S.Korean steelmaking firms rally on deal hopes

SEOUL, March 26 (Reuters) - The United States has agreed to exempt South Korea from steel tariffs, South Korea's trade ministry said on Monday, instead imposing a quota on steel imports as the two countries renegotiate a trade deal sharply criticized by U.S. President Donald Trump.

South Korea had meanwhile agreed to give ground on automobile trade regulations by agreeing to changes in the bilateral free trade deal known as KORUS, the ministry said.

In April, Trump told Reuters he would either renegotiate or terminate what he called a horrible trade deal that has doubled the U.S. goods trade deficit with South Korea since 2012.

The agreement means South Korea becomes the first U.S. ally to receive an indefinite exemption, albeit with quota, on steel tariffs imposed by Trump, a move that had fueled concerns of a damaging global trade war.

Last week, Trump temporarily excluded six trade partners, including Canada and Mexico, Australia and the European Union from higher U.S. import duties on steel and aluminum which came into effect on Friday.

The import duties, of 25 percent on steel and 10 percent on aluminum, were mainly aimed at curbing imports from China.

South Korea has received a quota of about 2.68 million tonnes of steel exports, or 70 percent of the annual average Korean steel exports to the United States between 2015-2017, which will be exempt from the new tariffs, the ministry said in a statement.

South Korea is the third-largest steel exporter to the United States and the world's top importer of Chinese steel, leading to concerns it was a conduit for China's excess capacity.

Shares in South Korean steelmakers rose sharply on Monday, with Dongbu Steel leading gains, on expectations of tariff exemptions.

South Korea's steel association said in a statement it was a "relief" that South Korea has been excluded from U.S. steel tariffs, but it was regrettable it was unable to secure more quotas for steel exports.

South Koreas steel industry will "try to pave the way to ease U.S. restrictions on steel exports," the association said in a statement.

South Korea and the United States also agreed that U.S. tariffs on Korean pickup trucks will be in place until 2041, extended by 20 years from the previous phase-out schedule of 2021.

Under the revisions, U.S. automakers will be able to bring into South Korea each year 50,000 vehicles per automaker that meet U.S. safety standards, not necessarily Korean standards, up from 25,000 vehicles previously.

South Korea also said it will "take into account U.S. standards and global trends" when Seoul decides its fuel economy and emissions rules from 2021 to 2015. (Reporting by Joyce Lee and Hyunjoo Jin Editing by Lincoln Feast)