Trending Now
We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.
{{ subpage.title }}
U.S. President Donald Trump meets with China's President Xi Jinping at the start of their bilateral meeting at the G20 leaders summit in Osaka, Japan, June 29, 2019.
Trump's China policy risks allies
What is President Donald Trump’s strategy on China? On the one hand, he slapped additional 10% tariffs on Chinese goods and is considering$1 million fees on Chinese-built vessels entering US ports. On the other, Washington and Beijing are reportedly discussing a cozy-sounding“birthday summit” between Trump and Chinese President Xi Jinping to talk trade in June. It’s enough to give investors whiplash – and make neighboring nations nervous.
And they may have good reason. Last week, Trump issued an“advance warning” to long-time allies Japan and South Korea that he is not prepared to defend them against Chinese aggression unless they make economic concessions. He complained that the American security treaty with Japanis nonreciprocal and claimed that “South Korea’s average tariff is four times higher” than that of the US.
But Trump was referencing South Korea’s Most Favored Nations tariff of 13.4%, which does not apply to most goods traded between the two countries since they signed a free trade deal in 2012. The actual tariff rate charged by South Korea on US goods is 0.79%, leading Seoul to offer to resolve any “misunderstanding” about the real charge.
Meanwhile, China’s talking tough. The Chinese defense ministry recently stated that it will“tighten the noose” around Taiwan if its pro-independence movements escalate. This signals that China will continue to use military gray-zone coercion against Taiwan to deter moves toward – or remarks about – independence, according to Eurasia Group regional expert Ava Shen. Beijing has also vowed to fight a tariff war with the US “to the bitter end” and is busily tariffing other nations, such as Canada, which sawa 25% tariff imposed on seafood, including important lobster exports, as of March 20.
What We're Watching & What We're Ignoring
WHAT WE'RE WATCHING
US-EU trade talks – Last summer, President Trump committed to slowing escalating trade measures against the EU in return for a deal to lower European subsidies on agricultural goods and protections for the automotive industry. But EU negotiators now want to exclude Europe's massive agricultural subsidies and other farmer-friendly policies in an upcoming round of talks. That jars with the goals of the US, and issues like labelling genetically-modified foods and the free flow of data are also likely to prove contentious. We're watching this, because failed trade negotiations could quickly lead to a renewed fight between the US and EU.
Zimbabwe –Deadly protests erupted in Zimbabwe this week as police cracked down on demonstrators who burned tires and blocked roads to vent their fury at a surprise hike in fuel prices. Raising fuel prices is always controversial – just ask French President Emmanuel Macron. But in Zimbabwe, people have additional reasons to be upset. The fuel shortages are indicative of deeper economic woes. Zimbabwe was forced to abandon its currency and adopt the US dollar during the ruinous reign of Robert Mugabe, whom the current president, Emmerson Mnagawa (known as "The Crocodile"), ousted a little over a year ago following a military coup. The change of power did little to fix the things — the unemployment rate is 80 percent, and Zimbabwe isn't producing enough hard currency to pay for its imports. The Crocodile may be in charge, but he hasn't managed to escape Mugabe's poisoned legacy.
WHAT WE'RE IGNORING
France's airing of grievances – Speaking of Macron, the French president has launched his latest attempt to break the gridlock of the gilets jaunes protests, now entering their tenth week: a three-month long national debate. Macron hopes that an airing of grievances in town halls across the nation will help "transform anger…into solutions." But the gilets jaunes are a leaderless movement venting anger at out-of-touch elites. They're unlikely to find common ground with Macron, a pro-business former investment banker who has already ruled out backtracking on controversial parts of his reform program. French King Louis XVI tried a similar approach in 1789, and it didn't end well for him. Macron was elected by voters who wanted someone – anyone – other than the bums in charge. Now he is the bum in charge.
The Venezuelan opposition – On Sunday, Venezuela's national intelligence service arrested Juan Guaido, president of the opposition-led legislature, and then quickly released him. This strange incident highlights the chaotic decision-making inside the Maduro regime, and it rallied international support behind an important opposition figure. But we're ignoring it simply because we don't see signs that Maduro's grip on power slipping anytime soon. Until the army decides it can no longer afford the economic devastation his government has created, Maduro will remain in power. He's helped by the fact that more than two million people who might otherwise be protesting in the streets have fled the country.