Trump's tougher stance on China is tested amid escalating trade fight, stalled North Korea talks

US President Trump's threats to impose another round of punishing tariffs on Chinese imports upended months of bilateral trade negotiations and signalled his frustration over reports from US officials that Chinese negotiators had sought to backtrack
US President Trump's threats to impose another round of punishing tariffs on Chinese imports upended months of bilateral trade negotiations and signalled his frustration over reports from US officials that Chinese negotiators had sought to backtrack on their commitments.PHOTO: AFP

WASHINGTON (WASHINGTON POST) - United States President Donald Trump's brinksmanship with China this week represents a test of his administration's tougher foreign policy towards the East Asian power as he seeks to clinch a hard-fought trade deal while preserving Beijing's cooperation on North Korea.

Mr Trump's threats to impose another round of punishing tariffs on Chinese imports upended months of bilateral trade negotiations and signalled his frustration over reports from US officials that Chinese negotiators had sought to backtrack on their commitments.

Amid the uncertainty, China hawks, including Mr Steve Bannon, Trump's exiled former White House adviser, rushed in to urge the President to hold a hard line, casting the fight as a proxy for a larger ideological battle for global influence.

"This is history in real time; and the world is a house divided - half slave, half free," Mr Bannon wrote in a Washington Post editorial on Tuesday (May 7). Mr Trump and Chinese President Xi Jinping "are facing off to tip the scales in one direction or the other".

White House aides discounted the influence of Mr Bannon, who also made his case in a Fox Business Network appearance. But his grandiose talk highlighted a key question: Would Mr Trump settle for a deal that narrowed the US$375 billion (S$510 billion) trade imbalance and boosted the short-term prospects for American farmers - or was he determined to force what aides called long-term "structural" changes to China's economic system that the Chinese Communist Party has long resisted?

The spectre of escalating tensions illustrated the risks of Mr Trump's China strategy as he simultaneously pursued denuclearisation talks with North Korea, which have rested in part on Beijing's enforcement of sweeping international economic sanctions on its neighbour.

Analysts said Beijing has not directly linked the two issues, but they warned that mounting hostilities with Washington could complicate the picture at a time when the nuclear negotiations have stalled.

"China is not going to take a position on North Korea over a fit of pique with Donald Trump, but at the same time, it is not unlike the Chinese to say, 'Why the hell should we accommodate you or take risks in service of a US priority when you're doing this to us on one of our core interests?'" said Mr Daniel Russel, who served as assistant secretary of state for East Asian and Pacific affairs in the Obama administration.

Mr Trump campaigned on ending lopsided trade relationships, and since taking office he has forced allies and rivals to the negotiating table through tariffs and threats to tear up existing trade deals. On China, the administration abandoned decades of US policy aimed at managing its peaceful rise and integration into the global economic and security systems in favour of a more competitive and confrontational relationship.

The move coincided with mounting bipartisan agreement in Washington that such a shift was overdue amid evidence that China was violating international standards, and Mr Trump won plaudits from the business community and foreign capitals.

The emerging administration strategy has encompassed challenges to China on 5G mobile technology, more US naval operations in contested the South China Sea, renewed support for Taiwan and pressure on smaller nations to forgo Chinese capital investment.

But it is on trade where the administration has taken the boldest actions, including China in a round of steel and aluminium tariffs on many nations in early 2018, then adding tariffs on another US$250 billion of Chinese goods last summer.

Mr Trump's approach "threw the Chinese off their game", said Mr Evan Medeiros, who served as senior Asia director in the Obama White House. But instead of raising the ante, he added, Chinese officials responded in relative moderation, imposing commensurate tariffs but tempering their rhetoric and maintaining robust dialogue with US officials.

"Their response was to sort of close ranks and find non-escalatory solutions," Mr Medeiros said, citing China's efforts to stabilise relationships with other regional players, including Japan, India and Russia.

On North Korea, the Chinese, alarmed by an increase in ballistic missile tests from Pyongyang in 2017, responded to Mr Trump's "maximum pressure" campaign by ramping up sanctions enforcement. North Korea sends 90 per cent of its exports into Chinese markets, and Mr Trump sought to establish a personal rapport with Mr Xi in a pair of reciprocal visits in hopes of nurturing that cooperation.

During 10 negotiating rounds over the past year, the US and China have attempted to hammer out a bilateral trade agreement to bridge differences over market access for US companies, intellectual property protections and the trade imbalance. As the two sides made progress, Mr Trump twice delayed increasing the existing tariffs on US$200 billion of Chinese goods, from 10 per cent to 25 per cent.

But on Sunday evening, in a pair of tweets, the President renewed that threat and said he was considering imposing a 25 per cent tax on another US$325 billion in goods. A person with knowledge of the White House deliberations said Mr Trump was angered after US negotiators told him the Chinese were reneging on a commitment over enforcement of intellectual property theft and over the timing of market openings in certain sectors.

Mr Brian Klein, who served as a career State Department official with a posting in Beijing, said Mr Trump's negotiating team is overestimating the impact of the tariffs on China's economy and the willingness of Mr Xi's regime to make a deal.

"There's little sign that the Chinese economy is being dramatically damaged," said Mr Klein, who operates Decision Analytics, a New York-based risk management consulting firm.

Mr Klein credited the Trump administration for winning concessions from China, but he added that "the question is whether this is becoming ideological and they are fixated on the 'changing China' theme. If that's really what he wants to do ... that's horribly misguided. There's no way Xi can unwind the Communist Party hold on the Chinese economy."

In his appearance on Lou Dobbs' Fox Business Network show, Mr Bannon cast Mr Trump's trade war as a "geopolitical struggle" against a "radical cadre of the Chinese Communist Party".

Last week, a high-ranking State Department official used even more inflammatory rhetoric, describing China as "a really different civilisation" and the first "great power competitor that is not Caucasian".

White House officials have said that the international pressure campaign on North Korea remains robust, but that recent US intelligence assessments have showed an increase in cross-border trade with China, according to a congressional aide briefed on the matter.

The aide, who was not authorised to speak on the record, said the Trump administration's rhetoric on China could force a recalculation in Beijing.

"If you see it as a zero-sum game and a war of all against all," the aide said, "the price and salience of North Korea increases for China."