Trump risks more than a trade war by targeting China

President Donald Trump's vow to enact revenge on China for "killing" the US on trade was a signature refrain of the 2...

Posted: Mar 4, 2018 10:15 AM
Updated: Mar 4, 2018 10:15 AM

President Donald Trump's vow to enact revenge on China for "killing" the US on trade was a signature refrain of the 2016 campaign, but his latest tough talk risks stoking an adversarial economic standoff with Beijing that could prompt geopolitical retaliation on issues ranging from North Korea to the South China Sea.

Trump's surprise announcement on Thursday that the US will institute tariffs on steel and aluminum imports has upset stock markets, angered US allies around the world and even drawn criticism from members of his own party -- but whether it represents the start of a global trade war is likely to depend on China's reaction.

Beijing's immediate response Friday was measured in tone -- urging the US "to abide by the multilateral trade rules and make contributions to the international trade and economic order" -- and concerns about potential retaliation for the tariffs have largely centered on China imposing its own punishing economic measures.

But Chinese officials have previously warned they are willing to do what they think is necessary to "defend our rights" should Trump introduce additional measures that target the Communist nation more heavily and directly.

In addition to the vast array of painful economic response options at its disposal, China could target US geopolitical interests if Trump escalates trade tensions.

"When we go to the next step and take action against China on investment and trade that will be much more significant, and then you will see their response spill over into other areas," according to Wendy Cutler, a former diplomat and negotiator who serves as the vice president of the Asia Society Policy Institute.

One concern is that China could respond to a more focused American trade campaign by slowing its cooperation on implementing sanctions against North Korea, a key component of the Trump administration's "maximum pressure campaign" to bring Pyongyang to the negotiating table over its nuclear programs.

US intelligence officials warn that North Korea could be just a few months away from achieving its goal of putting a warhead on a missile that could reach the American mainland.

Administration officials have emphasized that it is the goal of sanctions and diplomatic pressure to push into the future as far as possible the point at which the US might have to decide whether to engage in military action to stop North Korea.

But that window -- and any margin for error -- appears to be rapidly shrinking.

Despite implementing a series of sanctions on North Korea in recent months, US officials have long indicated that China must play a key role in implementing the measures -- and some experts warn that an adversarial trade policy would only add to the already difficult challenge of convincing Beijing to forcefully engage on the issue.

"The US is doing what it can to ratchet up sanctions pressure on North Korea, but that won't be enough unless the Chinese do the same," a former State Department official told CNN. "There's a serious risk that dissatisfaction with President Trump's trade policies will dampen China's willingness to cooperate and help move the ball forward on North Korea."

"North Korea is already very skilled at evasion, and if China and Russia are not doing what they can to prevent it we are going to be in a longer term situation where the sanctions are not effective enough to provide any real incentive for North Korea to seriously pursue a diplomatic track," the former official added.

Some argue that China's reduced influence over Kim Jong Un's regime and own self-interest might prevent it from purposefully sabotaging efforts to peacefully denuclearize the Korean Peninsula, but Beijing also holds additional cards should the US target its trade interests.

China could also respond to escalating trade tensions by raising the temperature in the East and South China seas or potentially making life harder in the United Nations Security Council on other issues.

"I can see them deciding that it's appropriate to cause trouble for us with allies," said William Reinsch, the Scholl Chair in International Business at the Center for Strategic and International Studies.

Ultimately, only time will tell how Trump and China will choose to proceed.

A senior administration official told CNN that the "Chinese reaction will depend on the modesty or severity of the actions POTUS takes" but also on whether "China is singled out or is one of many."

"It's just too early to tell," the official said.

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