President Donald Trump’s new tariff chart, which he unveiled Wednesday at the Rose Garden, had a mixture of surprising and predictable countries on the list. A high tariff on China? Not so surprising. But among the top 10 countries on his chart, eight are in Asia.
Many close US allies like South Korea and Japan were stunned by the steep rate increases applied to their exports.
As stunned as these US allies were at the steep increase in tariffs levied against them, they weren’t caught totally offguard. Just a few days before Trump’s tariff announcement, Japan, China, and South Korea’s trade ministers met in Seoul for the first time in five years to discuss coordinating a response.
Mike Bird, Wall Street editor at The Economist and a former correspondent based in Asia, talked with Today, Explained’s Noel King how US allies in Asia are responding to the tariffs and how China may be poised to lead new alliances on the continent. Click the link below to hear the whole conversation. The following is a transcript edited for length and clarity.
We’ve got China, Taiwan, Japan, India, South Korea, Thailand. What are we hearing today from leaders of those countries? Anything notable?
There’s a big range of reactions, and I think that reflects the difference in both relationships with the US and some different strategies going on.
So the Chinese government reaction, to note that the tariffs are deeply unreasonable, that it’s a sort of attack on the rest of the world, is probably the least surprising. I think it’s more interesting to break down the countries that are much closer diplomatically to the US. So Taiwan called the Trump tariffs “deeply unreasonable” and “highly regrettable.” South Korea said that they were studying what was happening. The Japanese trade minister called the move “extremely regrettable.“
But a lot of these countries are a little bit more circumspect and a little bit quieter, precisely because they have these very tight security relationships with the US and they’re very, very keen not to upset DC.
So when Trump held up his chart, it showed that Vietnam, for example, levies a 90 percent tariff on goods coming from the US. South Korea, 50 percent tariff. Donald Trump is saying these countries put tariffs on American goods and I’m going to fix it. Is he right? And if so, why was this going on?
So to be clear, we should start by saying there are trade restrictions that other countries put on the US. In some cases, they’re steeper than the ones going in the other direction. That is a reasonable thing for US policymakers to be upset about.
But what became very clear in the immediate aftermath of the announcement is that the figures being used weren’t drawn from any meaningful measure of, for example, the rates that Vietnam tariffs US goods. There was no relationship with that data. What seems to have happened is there’s been a reverse engineering of a figure via the trade deficits and surpluses that individual countries have with the US.
Basically, they’ve taken the trade surplus that Vietnam has with the US and they’ve divided it by the figure for Vietnamese exports to the US. It’s a sort of Excel spreadsheet job. And it bears almost no relationship to how these countries actually limit US trade. It’s a very strange measure to have used to decide which countries have been hit hardest.
Trump put big tariffs on Japan and South Korea. Do you think that this move forces them to rethink how they deal with the United States?
I think it will change the attitude quite a bit. One thing that the US government has tried to do a lot in the past few years is get cooperation from the Japanese and Korean governments in particular on things like export controls of semiconductors to China. That’s going to be a lot more difficult to execute if you are putting really, really steep tariffs on them.
I was reading over the weekend that Japan, South Korea, and China met for the first time in about five years to talk about trade. Do we know what goes on in a meeting like that? Does a meeting like that make America nervous?
This question of closer trilateral cooperation between China, Korea, and Japan has been going on for a long time, and it’s always been frustrated to some degree by the fact that these are three countries where usually, at any given time, someone’s upset with someone else. Whether that’s Japan and South Korea — they have a very fractious relationship — or whether it’s South Korea and China, whether it’s Japan and China, there’s usually someone that’s upset about something, and it’s limited the trilateral cooperation.
There’s always been discussion of a potential Japan, South Korea, China free trade area, and it’s never really come to fruition. Now, if you wanted to make it come to fruition, what you would want is an external threat that was common to all of those countries.
Huh.
I’m not sure there’ll be a trade agreement of that nature, but if I wanted to force one through, these are exactly the circumstances which I’d create to try and do that.
If China becomes a more trusted trade partner to American allies than America is right now, what? What are the long-term implications of this for China?
One thing the Chinese government has really struggled with in the past, and for good reason, is that they don’t really have a lot of natural allies or friends, even in Asia. I think the US seriously damaging its own relationships in the region does make things easier on that front.
If you listen to the Chinese Ministry of Foreign Affairs, they will tell you, and they have done for decades, that the US is a country that bullies smaller countries — it talks a high and mighty game about these lofty ideals of freedom and democracy and human rights, but in reality it’s just looking out for itself. I think these tariffs make that argument a lot easier to make in large parts of Asia. It’s a huge opportunity for them. You couldn’t have drafted these conditions better if you were a Chinese diplomat.