Tariff Time for China

Tariff Time for China

It sure is hard to keep pace with Donald Trump. He proved it again yesterday by replacing National Security Advisor HR McMaster with the hawkish John Bolton.


A few quick thoughts:

  1. In 2005, to sidestep a vote in the Senate, President George W. Bush used a recess appointment to make John Bolton his ambassador to the United Nations, because he didn’t believe a Republican Senate would approve him.
  2. Three years ago, Bolton wrote an op-ed in the New York Times under the headline “To Stop Iran’s Bomb, Bomb Iran.
  3. Three weeks ago, Bolton wrote an op-ed for The Wall Street Journal under the headline “The Legal Case for Striking North Korea First.”
  4. Trump is a punch thrower. He will now be taking national security advice from a punch thrower.

More to say on that in future editions. Today we want to focus on yesterday’s big trade news.

Trump wasn’t kidding when he pledged to get tough with the world’s largest emerging economy. Senior advisors have reportedly recommended US tariffs on Chinese exports of about $30 billion, but Trump decided to push that up to $60 billion. More than 1,000 products could be affected. We’re also likely to see new restrictions on Chinese investment in the US.

Another few thoughts:

  • China will move quickly to retaliate. For a glimpse of the anxiety this will cause US farmers, check out this piece from the Des Moines Register, which warns that China’s response will directly target states that Trump considers part of his political base.
  • China may also target the US auto sector for the same reason. (Michigan might be the most closely watched state on the electoral map as 2020 approaches.)
  • This gets to a point we’ve made before: Trump believes the Chinese economy is more vulnerable than the US economy, while China’s Xi Jinping believes he is stronger politically than Trump. They’re both right, and this confidence on both sides creates a risk of escalation that neither side wants.
  • To try to avoid that escalation, China will probably signal that it means to match Trump’s actions without exceeding them. We’ll hear the word “proportional” a lot in coming days.

Demography is destiny. That ominous-sounding pronouncement, credited to French philosopher Auguste Comte, is today taken to mean that a nation's fate depends on the youthfulness of its population. For a poor country to become rich, it needs lots of young people ready to work, to support those too old or too young to work, and to pay taxes. This is called the "demographic dividend."

That's an important part of China's success story. Over the past 40 years, more than one billion people have emerged from poverty in China. Waves of young people surged from the countryside into cities to work in factories. The state invested in education, and wages helped young workers, and then their children, go to school. The state also began a drive to develop the technologies of the future, by any means necessary. In China, once dirt-poor, hundreds of millions have created a middle class.

More Show less

Not everyone thinks that President Biden's decision to pull all US troops out of Afghanistan by 9/11/21 is a good idea. Conservative Congressman Mike Waltz (R-FL), a combat-decorated Green Beret with multiple tours in Afghanistan, thinks that the US still needs to maintain a small presence in the country to avoid incurring "massive risks." In a spirited discussion with Ian Bremmer on GZERO World, Waltz, who served as counterterrorism advisor in the George W. Bush administration, argues, "The next 9/11, the next Pulse Night Club, which is right on the edge of my congressional district, the next San Bernardino, that's now on Biden's watch. He owns it with this decision." Their conversation is featured in the upcoming episode of GZERO World, which airs on US public television starting Friday, April 23. Check local listings.

Vaccines are the best hope to end the COVID-19 pandemic. But rich countries are hogging most of the doses, with more than 83 percent of shots administered to date having gone to residents in high- and upper-middle-income countries. Most poor countries will have to wait years to achieve widespread vaccination, according to one study.

To address this inequity some stakeholders are pushing hard for waivers to intellectual-property (IP) rights through World Trade Organization trade rules so that manufacturers in poorer countries can make their own vaccines locally. India and South Africa have been leading the charge, which would essentially mean that deep-pocketed pharma companies like New York-based Pfizer, for instance, would have to hand over the keys to the kingdom, allowing local companies in New Delhi and Johannesberg to make generic versions of their vaccines.

Unsurprisingly, the debate has gotten fiery, with passionate arguments emerging both for and against.

More Show less

Carl Bildt, former Prime Minister and Foreign Minister of Sweden, shares his perspective on Europe In 60 Seconds:

What are the Russians up to against Ukraine?

We simply don't know, except the fact that they're concentrating a huge amount of military forces. And you don't do that for nothing or for fun. They are there for a purpose, to have pressure or to undertake limited to larger operations. We simply don't know. And when Putin delivered his State of the Union speech the other day, he didn't say a thing about this. They are now talking about withdrawing the forces. But let's wait and see. They have talked about withdrawing forces from Syria for a long time, but we haven't seen that as of yet.

More Show less

Australia rips up Belt & Road deal: Australia cancelled two 2018 deals signed between Victoria, Australia's wealthiest state, and the Chinese government, that committed the two sides to working together on initiatives under China's Belt and Road infrastructure development program. Foreign Minister Marise Payne said that the agreements "were adverse to our foreign relations." Similar deals between Victoria and institutions in Iran and Syria were also abandoned by the Australian government this week, under a 2020 law that allows Canberra to nullify international agreements struck at local and state level. (Australian universities say the "foreign veto bill" amounts to "significant overreach.") Meanwhile, Beijing hit back, calling the move "unreasonable and provocative," and accusing Canberra of further stoking divisions after a series of escalatory moves by both sides that have seen China-Australia relations deteriorate to their worst point in decades. Chinese investment in Australia dropped by 62 percent last year, a massive blow for Australia's export-reliant economy.

More Show less

50: The US will aim to cut its greenhouse gas emissions by 50 percent from 2005 levels by the end of the decade. The Biden administration's commitment, double the goal set by Barack Obama almost six years ago, was announced to coincide with a virtual Earth Day climate summit attended by dozens of world leaders.

More Show less

Russian president Vladimir Putin on Wednesday threatened an "asymmetrical, rapid, and harsh" response for anyone that dares to cross a "red line" with Russia.

What's the red line? Putin says he'll decide on a case-by-case basis. And the cases at the moment are growing: the US has sanctioned Russia over cyber crimes; Putin critic Alexei Navalny is near death in a Russian prison; the Czechs say Russia blew up a Czech munitions depot; and as many as 120,000 Russian troops are reported to be massing along Russia's border with Eastern Ukraine.

Which is to say: there's potentially a Sol Lewitt's-worth of red lines to ponder now.

Subscribe to GZERO Media's newsletter, Signal

The GZERO World Podcast with Ian Bremmer. Listen now.

GZEROMEDIA

Subscribe to GZERO Media's newsletter: Signal