Kim Jong Un Warns Trump He May Take ‘New Way’ Unless US Removes Sanctions

President Trump was quick to celebrate peace on the Korean Peninsula after his summit meeting with Kim Jong Un last year. Since then, however, progress has been mixed as North Korea refrained from nuclear testing and held high-level talks with the South but also failed to dismantle its nuclear weapons and ballistic missile programs. Now, in his New Year’s address, Kim Jong Un is warning President Trump that unless the United States “takes genuine measures for building trust” the North may return to its old ways.

In the speech, reported by Politico, Kim noted steps that he had taken toward the “complete denuclearization” of the Korean Peninsula saying that he agreed “that we would neither make and test nuclear weapons any longer nor use and proliferate them, and we have taken various practical measures” to fulfill this promise. He then challenged President Trump with two words: “Your turn.”

What Kim wants is illustrated by a statement issued in December through North Korean state media. “When we refer to the Korean peninsula, they include both the area of the DPRK and the area of South Korea where aggression troops including the nuclear weapons of the U.S. are deployed,” the statement said and then continued, “When we refer to the denuclearization of the Korean peninsula, it, therefore, means removing all elements of nuclear threats from the areas of both the north and the south of Korea and also from surrounding areas from where the Korean peninsula is targeted.” The statement called on the US to lift the sanctions on North Korea as well as for “completely removing the nuclear threats of the U.S. to the DPRK.”

Essentially, Kim is telling President Trump that the North Korean position on denuclearization is unchanged. The North rejects unilateral denuclearization and wants the US to remove its nuclear weapons from the Korean theater. The US removed its nuclear weapons from South Korea in 1991, but in his speech, Kim said that “strategic assets,” which North Korea often understands to include anti-ballistic missile systems as well as submarines and aircraft carriers, “should no longer be permitted” in or near the Korean Peninsula.

Kim also wants to be rewarded for the actions that he has already taken over the past year. His price for the détente with South Korea is the removal of US sanctions.

Kim also sought to drive a wedge between the US and South Korea. While President Trump is pushing South Korea to based on the peninsula, Kim encouraged the South to participate in several bilateral projects that exclude the United States.

In the speech, Kim warned that North Korea “might find ourselves in a situation where we have no other choice but to find a new way” if the US did not uphold its end of the bargain. While Kim was not specific about what “new way” the North might take, most observers doubt that it would involve a resumption of nuclear testing.

“One thing is clear: Kim is not going to return to any sort of posture where the US or its allies would consider a military attack, and that means no missile or nuclear tests for the foreseeable future,” Harry Kazianis of the Washington-based Centre for the National Interest told the South China Morning Post.

Ruediger Frank, an analyst at 38 North, believes that the entreaties to South Korean President Moon provide a clue as to what Kim’s “new way” would be. The speech was a message to Donald Trump, he writes, saying, “You are not our only option for security and economic development. If you refuse to be cooperative, we will ignore you and turn to China. Oh, and we will take South Korea along.”

Kazianis agreed, “Kim can present Trump with a choice: Either play ball with me on a negotiated nuclear settlement and reduce sanctions or I will go to China for help and get the economic development I want and keep my nukes.”

President Trump’s trade war now places him in an awkward position with respect to Korea. President Trump signed a new trade deal with South Korea last year that limits South Korean steel and aluminum exports to the US. The trade spat with China means that Trump now has less leverage with the Chinese against the North Koreans. The three geographical neighbors may become closer trading partners at the expense of US influence in the region.

If North Korea can pull the South into China’s orbit, it would be a major blow to the United States. South Korea is one of America’s largest trading partners in terms of both imports and exports. The nation is also home to 15 US military bases that provide a counterbalance to China as well as protecting South Korea from Northern aggression.

President Trump responded to Kim’s challenge with a New Year’s Day tweet, saying, “I also look forward to meeting with Chairman Kim who realizes so well that North Korea possesses great economic potential!”

https://twitter.com/realDonaldTrump/status/1080240049780940800

Oops! Trump’s Claims Of China Trade Deal Were Premature

President Trump’s much-ballyhooed trade agreement with China is looking less like a done deal and more like a work in process. Statements by Chinese officials indicate that Trump’s announcement of a deal was premature and there are concerns that the president’s jumping the gun may endanger the entire agreement.

In a series of tweets on Dec. 2, Trump said that China had agreed to “reduce and remove” their 40 percent tariff on American auto imports and start purchasing American agricultural products “immediately.” Before the trade war, Chinese tariffs on foreign autos were 25 percent. Since the trade dispute began, China has increased tariffs on American cars to 40 percent while reducing imports from other countries to 15 percent.

The lack of confirmation from the Chinese combined with Trump’s history of prematurely claiming success in international deals led many observers to be skeptical about Trump’s claims. Those doubts fueled an 800-point drop in the stock market on Tuesday after a 600-point rally on Monday.

Now statements by Chinese officials are confirming that the deal with the Trump Administration was merely an agreement to start negotiations. The Wall Street Journal reported this morning that China’s Commerce Ministry confirmed in a statement that the nation has agreed to a 90-day negotiating period in which both sides will stop increasing tariffs. The statement said that the negotiations had a “clear timeline and road map” and confirmed that “the Chinese side will start implementing the specific items both sides have agreed on, and the sooner the better.”

How much is already agreed upon was left unclear, but the Journal notes that Chinese government agencies and the nation’s supreme court announced tough penalties for violation of intellectual property rights. Infringement on intellectual property has been a major complaint of the Trump Administration. The new rules were dated Nov. 21, but were only made public yesterday.

On the other hand, the statement by the Commerce Ministry did not mention purchases of agricultural products or reducing auto tariffs. Some Chinese officials did suggest that their country may increase purchases of products such as soybeans and natural gas, which are in high demand in China. They did not specify amounts, however, and there was no indication of whether the tariffs would be reduced.

On Monday, President Trump even seemed to back off from his declarations of a trade victory. In a series of tweets, the president claimed that negotiations were already underway to see “whether or not a REAL deal with China is actually possible.” Trump added that China was “supposed to start buying Agricultural product and more immediately” and said that “it probably will.”

Trump closed his tweetstorm with the proviso, “ But if not remember [that] I am a Tariff Man.” The Trump Administration has said that if talks fail it will follow through with plans to raise tariffs on Chinese imports from 10 percent to 25 percent. The increase was originally scheduled for Jan. 1.

<blockquote class=”twitter-tweet” data-lang=”en”><p lang=”en” dir=”ltr”>….I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN</p>&mdash; Donald J. Trump (@realDonaldTrump) <a href=”https://twitter.com/realDonaldTrump/status/1069970500535902208?ref_src=twsrc%5Etfw”>December 4, 2018</a></blockquote>
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There is also confusion over the beginning of the 90-day period. Trump claimed that the truce period began on “the date of our wonderful and very warm dinner with President Xi in Argentina” on Dec. 1. Chinese officials have not confirmed this understanding of the timeline.

Many Chinese observers believe that Trump is deliberately trying to confuse the issue in order to trick Beijing into making concessions. “China should prepare but not rush to make concessions,” Yu Yongding, a researcher with government think tank Chinese Academy of Social Sciences and former adviser to China’s central bank, told the Journal. “This is a competition of endurance to see who breaks first.”

Some American experts agree. “It’s funny how far the administration has gotten on bravado and uncertainty — the ‘crazy uncle’ strategy with almost no organization, no whole-of-government approach, insufficient preparation and no talking points,” Scott Kennedy, a China expert at the Center for Strategic and International Studies, said in the Washington Post. “The strategy has thrown the fear of Marx into the Chinese. They have been knocked off their seats.”

Others point out that there are inherent risks in Trump’s approach. Michael Pillsbury, a former Pentagon official who Trump called “probably the leading authority on China,” told Axios that he was “getting warnings from knowledgeable Chinese about the American claims of concessions” that were never agreed upon by the Chinese. These include Trump’s claims about the immediate purchase of American agricultural products and Chinese tariff reductions.

“I have advised the president’s team that for the past 40 years the American side avoids disclosing Chinese concessions before the final agreed written statement is released,” Pillsbury said.

The Trump Administration’s brash China policy may have brought the two countries to the brink of a trade deal, but it is still possible that the president’s undisciplined tweets and claims may prevent a final agreement. There are signs that China is prepared to make concessions on some American priorities such as intellectual property rights, but at this point, a reversion to the pre-trade war status quo would be a victory for American businesses and consumers.

 

 

 

 

 

 

Trump vs. General Motors

 

Donald Trump launched his latest salvo against General Motors with a threat to end the automaker’s federal subsidies if it follows through with plans to close several North American plants and lay off about 15,000 workers. However, as with Harley Davidson’s decision to move some production to Europe, at least part of GM’s decision can be traced to the president’s trade war.

 

On Tuesday, the president tweeted, “Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland. Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies, including for electric cars. General Motors made a big China bet years ago when they built plants there (and in Mexico) – don’t think that bet is going to pay off. I am here to protect America’s Workers!”

 

White House economic advisor Larry Kudlow confirmed in a press conference that a possible move to cut GM’s federal subsidies was under consideration. Politico reports that Kudlow announced prior to the president’s tweet that the White House was “going to be looking at certain subsidies regarding electric cars and others, whether they should apply or not.”

 

Under current law, the federal government offers a $7,500 tax credit for new electric vehicles purchased in the US. This tax credit applies only the first 200,000 cars that a manufacturer produces. Since GM is close to reaching its limit, any change to existing law would have minimal effect on the company, but auto companies have been lobbying for an expansion of the law. CEO Mary Barra told Forbes that GM planned to double the resources devoted to electric and self-driving cars over the next two years. GM also reportedly gets about $943 million in other unspecified federal grants and tax credits.

 

Even though President Trump is talking tough over GM’s cuts, his policies are at least partly to blame for the lost jobs. Earlier this year, GM warned that Trump’s tariffs could force layoffs and cause increases in the price of cars. In September, GM announced that its 2018 material costs would increase by an estimated $1 billion due to tariffs as well as higher oil prices, inflation, and tighter supplies.

 

As with the higher cost of materials, there are a number of factors at play in the decision to close the plants and lay off workers. The plants being closed make sedans which are not selling well in the US as buyers choose more SUVs and trucks. Forbes also notes that the popularity of ridesharing services is driving a reduction in car ownership. A large supply of used cars has also contributed to a decline in new car sales.

 

The argument that GM’s cuts are purely due to poor sales of sedans misses an important point, however. The Wall Street Journal points out that China is GM’s largest market for small cars. After President Trump applied tariffs to Chinese imports, the Chinese government retaliated with a 40 percent tariff on imported American cars. If GM exports American-made cars to China they get hit with the double whammy of the US tariffs on imported steel and aluminum as well as the Chinese tariff on imported cars. That is a powerful incentive for the company to move small car production to China.

 

The entire episode is an example of the Law of Unintended Consequences. When President Trump launched his tariff policy to protect the American steel industry, it was entirely foreseeable that American companies that consume steel would suffer from higher steel prices. In the case of the auto industry, other problems are exacerbated by the trade war.

 

President Trump’s heavy-handed attempts to intimidate GM into keeping its plants open miss the mark. If the plants make products that are not competitive, then keeping them open will only weaken the rest of the company and possibly lead to further problems. If GM continues to build cars in the US that it cannot sell either here or abroad then it will be forced to either carry a large inventory or sell the cars at a loss. Alternatively, GM could pay workers to do nothing, but is a business‘s purpose to provide meaningless jobs or to sell products for a profit?

A better course would be to allow GM’s executives to take the steps to cut costs without incurring more public relations damage than necessary. The president should also get serious about eliminating trade barriers so American workers can build cars in this country and ship them around the world without incurring tariffs that make them too expensive for foreign consumers.

 

Unfortunately, President Trump’s trade policy has been similar to his immigration policy in that it focuses on erecting walls. Trump’s regulatory walls of tariffs and retaliatory measures by other countries are having the opposite effect from what was intended. Unless Trump reverses his trade policy, more American jobs will be shipped overseas to elude the tariffs that are being placed both on imported materials and exported American goods.

UN Security Council Sanctions North Korea (Again)

The United Nations Security Council has unanimously approved a new set of sanctions against North Korea in response to its nuclear and missile programs.  This is significant as both Russia and China voted for the sanctions, rather than vetoing them or abstaining from the vote. In order to get this unanimity, the United States had to remove provisions which would have blocked all oil imports into North Korea as well as provided for stronger naval inspections of ships entering or leaving North Korea.

However, the new sanctions do have some teeth.  They reduce oil imports into the country by 30%, ban all natural gas imports, prohibit the export of textiles (worth $800 million), eliminate work authorization for North Korean nationals (worth $500 million), ban joint ventures with the country or its nationals, and allow for inspection of ships (with the consent of the ship’s flag state).  It also imposes travel bans on certain individuals and freezes their financial assets.

U.S. Ambassador Nikki Haley said that the addition of this set of sanctions on top of previous sanctions means that 90% of North Korean exports are now banned.

The hope is that North Korea can be encouraged to stop its nuclear and missile testing programs through the use of these latest set of sanctions.  However, based on past history this may be a forlorn hope.  Since the country began weapons testing in 2006, sixteen resolutions have been passed by the U.N. Security Council condemning North Korea and imposing sanctions against the country.

Trump’s Korean Legacy: Shotgun Diplomacy

The last 24 hours have done nothing if not shown the resiliency of the American president’s thumbs. They are dutifully back at work now that he’s done his due diligence in Texas. Unfortunately, his performance in the wake of Hurricane Harvey does not invalidate the actions he takes the rest of the time. His latest tweeting should make us all wish it did.

Yesterday morning, President Trump shot across the bow of South Korean leadership by presuming to tell them – via Twitter, of course – that diplomatic efforts to save their people “will not work.” North Korea had just tested an underground hydrogen bomb that registered a 6.3 on the Richter scale. Maybe he thinks Twitter is a better method of communication than traditional government channels. Apparently, his real estate development experience has honed his foreign policy skills, and informed his knowledge of what North Korea understands. We are to assume his “good brain” knows more about North Korean behavior than South Korean leaders do.

Oh ok. So, after 60 years, they’re NOW finding out what Trump has been telling them for a few months? Got it. Six hours later, presumably to show he means business, he threatened to stop all trade with anyone who does business with North Korea, including China, who represents 83% of all DPRK trade.

So, they still only understand sanctions? Or military threats? Which is it? That itself came hours after he said he’s working on a plan to pull out of our free trade agreement with South Korea, too. Why he’s pushing them around on trade at the time we need military unity is unknown. This has economic leaders there worried. Add to this the disconnect between the public stance of our two countries, which Korean experts are calling “Korean passing,” or, the passing over of Southern interest to deal with North Korea unilaterally.

Yes, the President is literally taking a shotgun to everyone in the room – both our allies, and our enemies, along with the negotiators, all at once.

 

South Korea already has reason to distrust the American president’s impulses, as he once demanded South Korea pay for our military presence there. (They actually do subsidize 30% of operations)

Many felt his several statements over the years indicate he does not grasp the geopolitical value of the region.

If Trump gets his way (at least what he thinks the last 24 hours), our North Korean strategy no longer includes the collaboration of 51 million South Koreans facing probable death in a military conflict with their neighbors. But to make matters worse, we will no longer trade with China, Russia, India and even Brazil or Chile – because they conduct trade with North Korea – and we will no longer have free trade with the South. This means more than $1 trillion of economic activity will cease, if the U.S. government performs according to Trump’s tweets.

No doubt, the reliable defenders will rush to say:

1. He doesn’t mean it,
2. His administration will temper his threats, or
3. That it’s a good idea.

So, in other words:

1. He doesn’t speak the truth,
2. He can’t make good decisions without his administration stepping in, or
3. We’re headed for a global recession in the next year, and millions may die.

Which is it? The fact that we can ask is frightening.

I’m just gonna say it: We told you so.

 

 

Toddler Trump’s Terrific Tariff Tantrum Tweaks Top Advisors on China

President Trump was positively toddler-like in his single-minded pursuit of tariffs against China, and that has caused him to suspect some of his top aides don’t share his simplistic view of trade.

Axios reported:

Trump, addressing Kelly, said, “John, you haven’t been in a trade discussion before, so I want to share with you my views. For the last six months, this same group of geniuses comes in here all the time and I tell them, ‘Tariffs. I want tariffs.’ And what do they do? They bring me IP. I can’t put a tariff on IP.” (Most in the room understood that the president can, in fact, use tariffs to combat Chinese IP theft.)

“China is laughing at us,” Trump added. “Laughing.”

Kelly responded: “Yes sir, I understand, you want tariffs.”

Trump doesn’t want anything that the below-average uninformed voter can’t understand. If it’s on a foam board, Trump’s eyes glaze over. If a real-life Archie Bunker could not comprehend it in ten seconds, it’s too complex for the president.

That’s not to say he is incapable of understanding it. Far be it from me to impeach the great intellect of the man in the Oval Office (there, someone can now say I’ve used the “i” word). It simply means that Trump has no interest in the actual policies or effects of things. He wants to make a public show, and “intellectual property” (IP) isn’t showy.

“John, let me tell you why they didn’t bring me any tariffs,” he said. “I know there are some people in the room right now that are upset. I know there are some globalists in the room right now. And they don’t want them, John, they don’t want the tariffs. But I’m telling you, I want tariffs.”

Here is where Trump’s terrific tariff tantrum breaks down. Opposing tariffs does not make one a globalist, any more than pursuing “victory” in Afghanistan makes one a nation-builder. Tariffs hurt consumers; tariffs cost jobs. But Trump isn’t interested in actual jobs–only things he can tweet or announce on television.

If the president stands up and says we are going to “beat China” and announces “the finest tariffs you’ve ever seen, believe me,” then his fans will believe him. Some of them will believe him all the way to the unemployment line, like the workers at Carrier.

Just possibly, the people in the room, like senior trade adviser Peter Navarro, know this and wish to save jobs, while dealing with the biggest China-related issues (IP theft being high on the list). Maybe that’s why they keep bringing Trump IP, not tariffs. Maybe they are smart, and using foam boards in an attempt to teach the president something.

But none of that fits Trump’s script. He doesn’t want to understand it because even if he did, he can’t explain it to Archie Bunker in ten seconds.

So in the end, nothing will get done quickly, and the leaks will continue to spring forth as frustrated aides turn to the press in a vain hope to nudge Trump’s needle. If there was, in fact, one word I’d use to describe the Toddler Presidency, it’s “vain.”

Trump’s “Principled Realism”




Back in February, soon after President Trump took office, I posted that I thought he would pursue a foreign policy aligned with the international relations theory or perspective of “realism” (original article here).  To summarize, the realist perspective believes the following:

  • States are the supreme actors on the international stage
  • There is no authority higher than the state which can force its will upon it (i.e. the relationship among states is anarchic)
  • States are rational, making decisions which are in their best interest (they are amoral in a sense, because what’s “right” is self-referential to their own interests)
  • States desire to maintain and grow their power in order to pursue their interests and maintain their survival



President Trump’s speech last night about Afghanistan and South Asia served as a further movement towards realism.  In the speech, he expressed a pivot from the liberalism and idealism of past administrations to what he called “principled realism.”  The most telling statement of the speech in this regard was:

But we will no longer use American military might to construct democracies in faraway lands or try to rebuild other countries in our own image. Those days are now over. Instead, we will work with allies and partners to protect our shared interests.

As part of this “principled realism,” President Trump articulated the following “pillars:”

  1. Basing decisions on “conditions on the ground” rather than “arbitrary timetables.”
  2. Integrating American diplomatic, economic, and military power to achieve America’s goals.  In Afghanistan, this means enabling the Afghan military and government to be able to chart their own course once the fight against terrorism is won.
  3. Putting pressure on Pakistan to fight terrorists within its borders and to stop sheltering them.
  4. Strengthening America’s partnership with India and increasing India’s role in the region and in Afghanistan.  India can help with economic development in the area.
  5. Loosening the rules of engagement (ROE) that American military forces are bound by, in order to enable them to better fight terrorists and hostile forces.

In the short term, Trump’s speech means an increased American, and potentially NATO, military presence in Afghanistan.

Longer term, it seems to indicate that the outcome for Afghanistan may well be a negotiated peace with all parties involved in the government of the country, including the Taliban (as Trump stated in his speech).

Trump’s speech also means that India may arise as a power to rival China in the region and serve as a check on its ambitions.  The message to China is that America will find other partners willing to work with it, if China is unable or unwilling.

 

Is China Using North Korea To Test Trump?

China figures strongly into the current North Korea crisis, but exactly how is a matter of dispute. President Trump seems to believe that China is the key to resolving the matter of North Korea’s nuclear weapons, but it is far from certain that China’s interests in the region align with our own.

Beyond the fact that Trump was overtly hostile and, at times, insulting to China during the presidential campaign, China is in the midst of a long campaign to expand its power in Asia and beyond. Chinese island-building in the South China Sea is common knowledge. Less known is how Chinese influence is growing in the Middle East, Africa and even the Americas.

As Chinese military and economic influence grows around the world, the inescapable conclusion is that China has dreams of replacing the US as the world’s dominant superpower. That being the case, it would be in China’s interest to make the US look bad in the confrontation with North Korea. If China can use North Korea to hasten the American decline in Asia, which began with the 1953 stalemate in Korea and continued with Vietnam and the Trump Administration’s decision to withdraw from the Trans Pacific Partnership, it would probably not hesitate to do so.

Aside from their aim of overtaking the United States, a secondary goal of the Chinese government could be to test President Trump. There is pattern of Chinese crises shortly after Republican presidents take office. In June 1989, five months after George H. W. Bush became president, violent repression of the Chinese democracy protests at Tiananmen Square led to soured relations between the two countries. In April 2001, three months into the presidency of George W. Bush, a Chinese fighter collided with a US Navy reconnaissance plane. The American plane made an emergency landing on Hainan Island and the crew was detained for 11 days by the Chinese government. Now, soon after President Trump took office, the North Koreans increased their missile testing. While these incidents were presumably not manufactured by China, they may well have used the events to test the mettle of the new occupants of the Oval Office.

What could be the Chinese endgame for the Korean crisis? After President Trump made trade concessions to China last spring for doing approximately nothing to help with the Korean situation, Beijing may believe that they can win additional concessions from the US if the crisis is allowed to get worse.

If President Trump backs down after having made resolving the North Korean issue a priority, the Chinese will win by default. The United States and President Trump will lose face and credibility around the world. With both President Trump and Kim Jong Un trying to outdo the other’s bellicose rhetoric, at the moment China is playing the role of the adult in the room.

If the US actually attacks North Korea, it would present a problem for China. China has a longstanding relationship with its patron government in Pyongyang. Animosity between the Chinese and the Koreans goes back centuries, but for the past 75 years, North Korea has been a loyal client of Communist China.

In 1950, when American and United Nations troops advanced too close to the Chinese border, China intervened with a massive attack that sent allied armies reeling. Those who doubt that China would do the same thing in 2017 need only consider the unofficial nickname of Korea, “a dagger aimed at the heart of China.” China cannot allow the US or its allies to occupy North Korea.

A US attack on North Korea would require a Chinese response and the Chinese have said as much in an editorial in the Chinese Global Times. The paper notes that “Beijing is not able to persuade Washington or Pyongyang to back down at this time,” but that “it needs to make clear… when their actions jeopardize China’s interests, China will respond with a firm hand.”

The editorial says that if North Korea strikes first China will remain neutral. This may be a tacit assurance that the North will not attack without provocation. Then it issues a warning: “If the US and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so.”

Regardless of whether China is goading North Korea forward behind the scenes or Kim is acting on his own, the brinksmanship is a most dangerous game that could easily get out of hand and lead to a major conflict. Whatever President Trump does, on the Korean peninsula and elsewhere, the Chinese will undoubtedly be watching.