President Donald Trump’s latest round of tariffs against Chinese goods went into effect Monday. Predictably, Beijing responded by raising another $60 billion in tariffs against the U.S.‘s $200 billion. China is now approaching the point of running out of U.S. goods to target with tariffs. One thing’s clear: Neither side is showing any signs of backing down. It looks like China has decided to play the long game, waiting it out and hoping that the impact of the tariffs will negatively affect Trump politically. But as we have stated repeatedly, Trump’s actions against China are more than merely seeking economic concessions.
On the heels of the latest tariff levy, Trump signed a new major trade deal with South Korea, the U.S.’s sixth largest trade partner, which he called a “historic milestone in trade.” The new deal will reduce the U.S. trade deficit with South Korea by more than double the original 2012 U.S.-Korea Free Trade Agreement (KORUS).
But Trump is accomplishing a couple of other things here, too. With this new KORUS deal he’s shored up an important regional ally and come through on his campaign promise to renegotiate trade deals so as to ensure that they are reciprocal and fair to the U.S. Secondly, he continues to send the message to China that he will not back down until Beijing turns from its unfair trade tactics. Third, he is also sending a message to North Korean dictator and Chinese puppet Kim Jong-un. Essentially, the message tells Kim to compare the relationship that South Korea has with the U.S. versus the relationship North Korea has with China. Clearly, South Korea has prospered far more from its close relationship with the U.S. than has North Korea from China.
On that note, the White House is working on setting up a second Trump/Kim summit, with Trump recently stating, “I think a lot of progress is being made. I see tremendous enthusiasm on behalf of Chairman Kim for making a deal, and I think that’s something that’s very good.”
Finally, while all of these trade negotiations and move were going on, the U.S. sent another signal against Chinese regional aggression when the U.S. State Department approved the $330 million sale of F-16 fighter planes and parts to Taiwan. The Chinese, of course, still claim that self-ruled island nation as their own territory and refuse to recognize its independence. This is a stick in the eye to Beijing, and it’s all part of a sweeping strategy.