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Trump’s Great Game: Playing Russia Against China

January 17, 2017 • GLOBAL ECONOMY, Americas, Asia - Pacific, China, Dan Steinbock

By Dan Steinbock

Trump has pledged to reset the White House policies on “America First” basis. In Asia, it may mean an effort to balance with Russia against China and the reverse of US China approach in the 1970s.

 

After inauguration, Donald Trump will move from Trump Plaza in mid-Manhattan to White House in Washington, where he will enjoy extraordinary execution power. Today, Republicans will control the White House, the Senate and the House of Representatives.

Consequently, whatever the administration will decide to do is likely to be bigger and bolder, move ahead faster and have greater consequences.

In Asia, that may translate to a double pivot.

 

Pivoting Away from China

Through his campaign, Trump voiced strong opposition against Obama-led Trans-Pacific Partnership (TPP), while labeling the North American Free Trade Agreement (NAFTA) a disaster. He has also suggested that he would renegotiate or reject other US international commitments.

In particular, he has threatened to use 35-45% import tariffs (although currently Trump’s team has been floating a 10% tariff) to force some countries, particularly Mexico and China, to change what he calls their “unfair trade practices”. Indeed, he is likely to press talks on trade practices, while forcing Beijing to enforce intellectual property rights.

High-level trade appointments suggest that he is likely to walk the talk. He chose Peter Navarro – the author of The Coming China Wars (2005) and Death by China (2011), and What China’s Militarism Means for the World (2015) – to head the newly-created National Trade Council (NTC), which will oversee industrial policy in the White House. Navarro’s fellow China critic Dan DiMicco, former CEO of Nucor, America’s largest steel company, became Trump’s trade advisor. In turn, the new US Trade Representative will be former Reagan administration official Robert Lighthizer, a staunch critic of China’s trade practices.

US-led free trade plans have been shelved, which has left China an opportunity to redefine trade in Asia Pacific. That effort, however, may have to cope with Trump’s double pivot.

Trump’s trade warriors will work closely with Secretary of Commerce Wilbur Ross, another billionaire investor. Trump’s trade warriors will begin by targeting those countries China, Germany, Japan and Mexico that currently enjoy the heftiest trade surplus with the US. In turn, the demise of NAFTA would hurt not just Mexico, but Canada.

Meanwhile, US-led free trade plans have been shelved, which has left China an opportunity to redefine trade in Asia Pacific. That effort, however, may have to cope with Trump’s double pivot.

 

 
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