Trust, but verify is my response to President Trump’s latest deal-making with China President Xi Jinping. Of course, that’s always the case with the Chinese, who can never be counted on to keep their promises. Then again, President Trump knows all about that and will unhesitatingly slap high tariffs on China if they break their commitment to stopping fentanyl or holding back rare earths or not purchasing soybeans, oil, or other commodities. At least for a year, China's rare earth black mail will stop. It was seven years ago, at the G-20 in Buenos Aires, Argentina when President Trump first asked Xi to stop fentanyl, and Xi quickly said he would. But he did not. That was seven years ago. So here we are again. And for the sake of preventing hundreds of thousands of more deaths from the deadly drug, hopefully Xi will keep his promise this time.
But let’s step back for a moment. One of Mr. Trump’s great accomplishments in his Southeast Asian trip was basically to use trade deals as a key instrument of foreign policy in order to corner China. Supreme Court, please take notice. Trade is inseparable from foreign policy. That’s why IEEPA (International Emergency Economic Powers Act) is important in trade deals with Australia, Japan, Vietnam, Malaysia, Cambodia and South Korea, including strict regulations on Chinese trans-shipping, where they try to route their cheap exports and unfair trading practices hidden by other countries. All that’s been banned in these trade deals.
Australia and Vietnam already have rare earth stockpiles, and the other countries are developing them, as is the U.S. So for a year, China’s rare earth blackmail will stop. None of those countries are in love with China. Surely the Supreme Court will understand that it is the commander-in-chief who holds sway over foreign policy, exactly when he is developing international trade policy.
In some sense, this is the most important point made during this Presidential trip. And Trump is out-foxing Xi. To be sure, U.S.-China relations are de-escalating and Chinese tariffs will come down a bit from 57% to 47%. There will be no 100% tariff surcharge. The question now is whether this is a new era of SINO-U.S. cooperation. Or another step in a managed de-coupling strategy. Only time will tell.
I haven’t heard any discussion about a China cease and desist of Russian oil purchases. We'll see about that. It does look like the TikTok deal will go through.
But surely U.S. Trade Rep. Jameson Greer will continue his 301-investigation concerning China’s broken promises over the U.S-China Phase One Trade Deal signed during Mr. Trump’s first term. President Trump calls this meeting a 12 out of 10, which is a pretty high. Hope he’s right. But remember Reagan: Trust but verify.
