North Korea is the primary reason behind the United States’ decision to go ahead with proposed tariffs on China, according to China affairs experts.
The joint statement between the United States and China released on May 19 put trade spats between the two countries on hold. Ten days later, however, the White House reversed course and announced that the United States, would, after all, go ahead with imposing 25 percent duties on $50 billion worth of Chinese imported tech goods.
“From now on, we expect trading relationships to be fair and to be reciprocal,” President Donald Trump said in a statement on May 29.
White House Press Secretary Sarah Sanders, speaking at a daily press briefing on May 30, reemphasized Trump’s stance. She said, “What the President is concerned about is making sure he stops the unfair trade practices that China has engaged in for decades,” including intellectual property theft practices, said Sanders.
Frank Xie Tian, a business professor at the University of South Carolina–Aiken, explained the sudden U-turn was because “significantly increased purchases of U.S. goods and services” alone, as written in the joint statement, could not fundamentally reduce the U.S. trade deficit with China, in an interview with The Epoch Times.
“America wants structural changes [from China],” said Xie, explaining that “the fundamental causes behind the trade imbalance—government interference [in the market], subsidies, export tax rebates, currency manipulation—all of these [practices by China] must be changed.”
Another reason is the role China has played in the ongoing negotiations with North Korea on denuclearization, said Xie. He explained that North Korea toughened its rhetoric twice after North Korean leader Kim Jong Un visited Beijing, first in March, then for a second time in early May. Kim threatened to call off the summit with Trump, while senior North Korean official Choe Son Hui suggested a “nuclear-to-nuclear showdown.”
Professor Xie explained, “I think the White House is upset about how China has meddled in the North Korea nuclear issue.”
Wen Zhao, a Canada-based political commentator with New York-based broadcaster NTD, explained the connection between trade and North Korea issues to The Epoch Times: though China did not promise to reduce the trade surplus by a specified amount in the joint statement, Trump agreed to the compromise in an effort to get China on the same page regarding North Korea. But since Trump has recently gotten North Korea back on the negotiating table through his own means [including a strongly-worded letter to Kim], Trump no longer needed to abide by a trade compromise he may not have liked in the first place.
China could see additional pressure from the United States as denuclearization talks continue. According to a May 22 report by news blog, The Washington Reporter, a plan is being formulated by the White House National Security Advisor John Bolton, Treasury Department, CIA (Central Intelligence Agency), and the State Department to sanction 13 Chinese bank executives for their continued business with North Korea, in violation of United Nations sanction agreements. The U.S. sanctions would freeze their assets and enact travel bans, according to the report.
The U.S. Department of the Treasury did not respond to questions about the names and banks by press time.
Three executives from China Construction Bank, one of the big four state-run banks in China with total assets of 12.28 trillion yuan (about $1.9 trillion) in 2011; three executives from Agricultural Bank of China, a state-run bank with total assets of 13.24trillion (about $2 trillion); and three executives from the Postal Savings Bank of China, a commercial retail bank with total assets of 8.28 trillion yuan (about $1.3 trillion) in 2016, were among the targets identified, according to Washington Reporter.
Professor Xie believed that eventually, China would give in to the U.S. trade demands, given how the United States could find replacements for Chinese products from countries such as Vietnam, Indonesia, and Malaysia.
On the other hand, “for the Chinese regime, losing the American market would be a devastating economic blow,” said Xie. The United States is the biggest buyer of Chinese goods, so China would rather negotiate how to lower the trade surplus and earn less, rather than do no business at all, he explained.