It’s a poker game! Trump raised China $200 billion dollars. That combined with the initial levy of tariffs represents about 50% of the Chinese trade imbalance chips on the table. Will they call the bet?
NoKo’s recent display of intransigence and petty stonewalling of Secretary Pompeo is, without a doubt, a part of Trumps equation, in his mind it’s all connected and it is. The deep state, State Department will always argue for de-coupling issues that should not be. They will argue that NoKo, Chinese incursions in the South China Sea and trade imbalances should all be treated as singular issues not connected to the others resulting in a Kabuki dance that accomplishes nothing of significance. That attitude and the execution that results from that attitude is one of the reasons why we’ve been getting our lunch money stolen for decades.
Thought experiment; name one significant, obvious diplomatic victory we’ve had in the administrations leading up to Trump. The Iran deal; fail, trade policy; fail, NATO, fail, border security, fail, standing up to China, Russia and Turkey, fail! Middle East peace, really? The list goes on and on. Heck even Hillary had trouble identifying any significant accomplishment during her tenure at State, it was all vague; she ‘represented’ something or other.
We have lift off. China, now facing tariffs on $200 billion in exports to the U.S., should be coming to the harsh reality that Barack Obama is not in office anymore, there is a new sheriff in town and were fighting back to keep ahold of our lunch money. If China calls the bet they will quickly be down to ‘a chip and a chair’ in the trade war. We should expect threats related to selling off U.S. Treasury notes but that’s a hollow threat as they are unlikely to get a better more secure option, especially in light of the role they’ve taken as Africa’s personal loan officer, becoming Africa’s largest single trading partner.
And it just gets worse. U.N. Ambassador Nicki Haley presented evidence to the U.N. sanctions committee of 89 instances of sanctions violations regarding petroleum products being delivered to NoKo by way of ‘ship to ship’ transfers. Russia and China are noted specifically.
Every move regarding China or NoKo is a message to the other and NoKo has to be wondering if acting as a Chinese puppet is really in their long term interests. Perhaps China is wondering if giving up on NoKo and giving Trump a victory he very much desires is the path for China to mitigate the tariffs, if that’s the deal it should be done with a near term sunset.
China and NoKo might want to pay attention to the fact that U.S. Markets have not freaked out over the tariffs; or the potential for a trade war; perhaps the markets agree with Trump that there should be no way for us to lose a trade war.