President Donald Trump’s 100-hour trip to Japan and South Korea, primarily to attend the annual G20 international economic policy summit in Osaka, Japan, had been long anticipated. It featured another opportunity for Trump and Chinese President Xi Jinping to break the impasse in trade talks that has led to a serious escalation in the year-long trade war between the world’s two largest economies. Talks were broken off in May after Trump angrily accused China of backtracking on agreements the two sides had previously reached during months of difficult negotiations.
The US had begun the trade war last year by imposing 25% tariffs on $50 billion worth of imported Chinese goods, because China had been engaging for years in unfair international trading practices, including currency manipulation, non-economic barriers preventing American firms from accessing China’s markets, and the wholesale theft and forced sharing of US intellectual property.
Trump had warned China that if the trade talks did not go well, he would impose tariffs on many more Chinese goods. He carried out that threat in May by raising tariffs from 10% to 25% on $200 billion of additional US imports from China, sparking outcries from American firms who said that they would have to pass the new tariffs along to their American customers. Other American companies also had to overcome retaliatory tariffs that were imposed by China on many popular American exports.
HOW THE TRADE WAR WITH CHINA SPREAD
The impact of the trade war was rapidly spreading beyond tariffs. US farmers complained of sharp cuts in purchases by their longtime customers in China for American grain. China complained about an American ban and public warning against the purchase of 5G wireless communications products made by the Chinese-owned electronic giant Huawei because they posed a potential eavesdropping threat to national security. Finally, Trump had announced his intention to slap 25% tariffs on another $300 billion of imports from China, this time including many popular consumer goods for the US market, unless progress resumed toward a mutually acceptable agreement.
The meeting between Trump and Xi in Osaka was characterized by both sides as a limited success. They halted the tit-for-tat exchange of mutually escalating trade sanctions, and agreed to resume the US-China trade negotiations which had been suspended in May.
Trump also suspended the threatened imposition of additional tariffs on Chinese goods, while leaving the existing tariffs in place, and China agreed to resume the large-scale purchase of American agricultural products.
Just before the G20 meeting in Osaka, media reports predicted that China would demand the end of all US restrictions on doing business with Huawei. The restriction on selling US-made electronic components to Huawei and US accusations that Huawei’s 5G equipment was laced with Chinese spyware was having a serious impact on the company’s business.
While avoiding a discussion of charges that Huawei was secretly transmitting the data passing through its equipment to Chinese intelligence, Trump did try to downplay the issue’s national security importance by saying it did not constitute a “great national emergency.”
CHINA ISN’T BUDGING ON THE REMAINING TRADE ISSUES
But in the discussion in Osaka, there was no progress on the trade issues which remain unresolved between the two countries. These include US demands for changes in Chinese laws to halt and punish intellectual property theft and the full opening of protected domestic Chinese markets to fair competition from American companies.
US companies doing extensive business with China expressed relief that they would not have to contend with a new round of Trump-imposed tariffs, but because previous tariffs remain in place, American companies have a strong incentive to continue looking for alternatives to their existing Chinese suppliers and creating new supply chains in North America.
But as long as the trade dispute with China remains unsettled, it poses a potential political threat to Trump’s chances for re-election in 2020. Midwest farmers who voted for Trump in 2016 and have lost their Chinese customers because of the trade dispute may think twice before supporting him again. Similarly, Trump’s opponents will be able to argue that the burden of the tariffs which remain on Chinese imported goods will ultimately be borne by American consumers.
Overall, there is a growing consensus, even among many of Trump’s political enemies, that he deserves credit for being the first president to stand up and fight China’s trade abuses.
Some say that Xi is dragging his feet on a resolution of the trade dispute, hoping that the US tariffs will eventually be lifted without the need for any concessions from China if Trump’s loses his bid for re-election next year. The same is also being said about Iran’s long-term strategy in the face of the US embargo on its oil exports. But in both cases, Trump’s policies are beginning to inflict a significant amount of economic pain on both countries, forcing their leaders to ask themselves whether they can put up with it for at least another year and a half, when Trump’s first term in the White House ends.
TRUMP PRACTICED HIS NEGOTIATING METHOD
Other world leaders were also in attendance at Osaka, including some who are hostile to American interests around the world, such as Russian President Vladimir Putin, and loyal US allies, including British Prime Minister Theresa May and German Chancellor Angela Merkel.
Trump used the meeting to practice his unconventional style of personal diplomacy with world leaders, including friend and foe alike. Trump’s methods are based on the negotiating and communications skills he developed during his decades as a New York City real estate developer and later as a successful promoter of his brand associated with a wide variety of businesses, ranging from golf courses and hotel casinos to luxury merchandise and, at one point, a commercial airline shuttle.
Trump’s diplomatic method is based upon establishing a personal rapport in opening a dialogue with America’s enemies around the world, rather than to pursue the most common alternative, which is to confront enemy provocations, inevitably raising tensions with them. In many cases, the Trump’s diplomatic conversations are preceded by a vivid, Trumpian demonstration of American military strength and resolve, such as diverting a US aircraft carrier to safeguard international tanker traffic at the entrances to the Persian Gulf.
One example of Trump’s tough and friendly technique was his light-hearted conversation with Putin in Osaka while continuing to ratchet up US economic sanctions on Russia and the oligarchs who support Putin. At one point, a reporter asked Trump if he would tell the Russian leader not to meddle in US elections.
“Yes, of course I will,” Trump said, and then, turning to Putin, said jokingly, “Don’t meddle in the election, Mr. President.” But such flippant statements are not sufficient reason to presume that the president doesn’t appreciate the seriousness of Russia’s election interference.
Trump has always been reluctant to talk openly about Russian efforts to meddle in the 2016 presidential election, because many Democrats, despite the findings of the Mueller report, do not accept that the collusion accusation was a hoax and still insist that Trump owes his presidency to Russian interference.
TRUMP ADDS SPONTANEITY TO US FOREIGN POLICY
Trump’s activities over the weekend demonstrated the element of instinctive spontaneity which Trump has added to the conduct of American foreign policy. Trump has an unusual willingness to trust his instincts and act on his personal hunches and sudden changes of mind, even before he has fully analyzed their potential strategic consequences.
Many foreign policy analysts are still wedded to Cold War-era theories which no longer reflect the realities of the threats the US faces today. They hate the unpredictability and lack of consistency that Trump’s fluid approach to governing generates. But when he ran for president in 2016, Trump promised voters that he would discard the analytical approach employed by the foreign policy establishment which has led to so many mistakes in US foreign policy in recent decades. These include the quagmires which bogged down US troops in Iraq and Afghanistan, and the endless failures in the pursuit of the two-state solution in the Israeli-Palestinian conflict.
Instead, Trump has chosen to rely on his gut instincts and a willingness to break the rules of conventional diplomacy to do what he thought was right at that time, or what would work, rather than following the tired and predictable advice of the “experts,” which has often been wrong.
This deliberately unconventional policymaking approach has unnerved and upset Trump’s critics, who warn that his spontaneous unpredictability is a threat to national security. In fact, Trump has been much more cautious to avoid foreign military entanglements than his predecessors in the White House have been. The most recent example was Trump’s decision to overrule the advice of his White House security advisers and to cancel, at the last minute, a deadly airstrike on Iranian missile bases, probably because Trump realized that the downing of an American drone by Iran over international waters had been intended by Iran’s leaders to provoke just such an overreaction.
TRUMP HAS BEEN RIGHT TO TRUST HIS GUT
Trump was also right to make gut decisions which were unpopular at the time but ultimately proved to be the correct moves. These include moving the US embassy from Tel Aviv to Yerushalayim, abandoning the one-sided restrictions imposed on US companies by the 2015 Paris climate agreement, holding a series of face-to-face summit meetings with Kim Jong Un, the dictator of North Korea, and walking away from the 2015 Iran nuclear deal.
For example, Trump has been criticized for holding summits with the North Korean dictator because they have failed to yield much progress so far towards the goal of Korean denuclearization. But the summits did succeed in tamping down the threat of war which had risen to near crisis levels due to North Korea’s provocative missile tests and belligerent rhetoric. Trump’s summit initiative also opened a channel of communications between the two sides which has kept the still volatile North Korean situation under much better control.
The most recent meeting between Trump and Kim, on the border between North and South Korea, resulted from a spontaneous invitation by Trump, with just 24 hours of advance notice. Trump tweeted, “If Chairman Kim of North Korea sees this, I would meet him at the Border/DMZ just to shake his hand and say Hello(?)!”
Trump’s trip to the DMZ to meet with US troops stationed there had long been planned, but because the previous meeting between Trump and Kim in Hanoi, Vietnam, in February was judged a failure, Trump was not certain that Kim would agree to meet with him again.
The fact that the meeting actually did come off without a hitch was totally unexpected, but it provided encouragement and built confidence on both sides. It also set the stage for fresh efforts to reach an agreement between the North and the South that would mark the official end of the Korean War, terminating a state of war which has lasted for almost 70 years.
Nevertheless, the anti-Trump media condemned the president for daring to historically step across the border onto North Korea soil alongside Kim, and to proclaim it to be a “great honor,” even though Kim and his regime are notorious for their human rights abuses, and the systematic political oppression of the North Korean people.
MEDIA DISTORTIONS BLOCK THE PUBLIC’S VIEW
The public does not fully appreciate the successes of Trump’s personal approach to foreign policy because the media consistently misreads the significance of his interactions with world leaders. For example, Trump was criticized again for exhibiting a friendly attitude during his meeting with Putin instead of scolding the dictator for Russia’s interference in the 2016 election. We saw the same kind of criticism of Trump’s demeanor during the July 2018 summit meeting with Putin in Helsinki, Finland. His critics wanted Trump to publicly accuse Putin of instigating 2016 Russian election interference, which Putin had already denied.
But Trump understood that embarrassing the Russian leader in that way would just make it even harder for him to gain Putin’s cooperation on issues where US and Russian interests coincide. These include avoiding an accidental military confrontation in Syria and fighting against radical Islamic terrorism. Trump’s critics claim his willingness to publicly accept Putin’s claim to be innocent of interfering with the US presidential elections over the conclusions of the American intelligence community betrays a lack of patriotism on Trump’s part. But such a conclusion is naive.
Publicly calling Putin a liar to his face would have violated every diplomatic protocol, as well as simple courtesy, and could have provoked a dangerous reaction from the Russian leader. A more reliable gauge of Trump’s attitude towards Putin can be derived from Trump’s imposition of several additional sanctions on the Russians in punishment for their egregious behavior.
Trump has also been accused by critics in the media of trying to benefit politically from photo ops with world leaders during his travels to international meetings such as the G20. The question that should be asked is why Trump has been singled out for criticism for this behavior, which has long been standard operating procedure for every elected official who attends such events, including President Obama while he was in office.
The same holds true for criticism Trump received for staging the historic photos which emerged from his meeting with Kim at the Korean border. The photos worked as intended, sending a peaceful message to the rest of the world. That criticism illustrates the growing frustration of Trump’s media enemies who look for every excuse to disparage the president, even when he is clearly doing the right thing, for fear it will help him win re-election next year.
FAKE NEWS AND MEDIA VENDETTAS
The media has also demanded that Trump call out foreign leaders, including those who are longtime US allies, whenever they are accused of inhibiting freedom of the press by killing reporters in their own countries. In his meeting with Putin, Trump apparently raised the issue unintentionally when he complained about being a victim of “fake news” in the American media.
When Trump suggested to Putin that “fake news” is a uniquely American problem, which does not exist in Russia, Putin shot back, speaking in English, “we also have it. It’s the same [in Russia].” The two leaders then laughed about it. This caused some reporters watching the exchange to take offense, because Putin is accused of having had dozens of Russian reporters over the years put to death for daring to criticize him.
Reporters also condemned Trump for his warm greeting of Saudi Crown Prince Mohammed bin Salman at the summit. The crown prince has been accused by the CIA of possibly having ordered the murder of Washington Post columnist Jamal Khashoggi, a critic of the Saudi regime, in the Saudi embassy in Istanbul, Turkey.
For that reason, some journalists argue that Trump should not have said, upon meeting the crown prince in Osaka, that it was “an honor to be with the crown prince of Saudi Arabia, a friend of mine — a man who has really done things in the last five years in terms of opening up Saudi Arabia,” without having mentioned his alleged connection to the murder. This is also an unrealistic demand from the media upon Trump in his dealings with one of the most powerful political leaders of America’s closest Arab ally in the Middle East.
There is certainly ample reason for US officials to discuss concerns about Saudi human rights violations, but the proper time and place to raise such issues is certainly not in front of news cameras at an international economic summit meeting. When reporters later questioned Trump on that point, he told them that he did discuss the murder of the journalist with the crown prince, when the two were talking in private. Trump added that he, too, was “very angry” and “very unhappy” about Khashoggi’s murder,
The media also unfairly treated Ivanka Trump, who has been serving as an unpaid policy advisor to her father on the White House staff, along with her husband, Jared Kushner.
The media ridiculed Ivanka for her appearances in the midst of meetings between heads of state and diplomats at the Osaka summit, as if she were an interloper who had no right to be there. In fact, she had a speaking role at one of the G20 business sessions, as an expert on the topic of women in business, on which she is well qualified.
After graduating with honors from the Wharton Business School, Ivanka took an executive position with her father’s real estate firm, The Trump Organization. She also started her own successful jewelry and fashion businesses, but shut them down after her father won the presidency and moved with her husband and children to Washington, DC, to work in the White House.
Ivanka and her husband are two of Trump’s most influential and trusted advisors on a broad range of policy issues. Jared had shepherded the historic prison reform bill through the legislature, and has taken the lead in Trump administration efforts to develop a new approach to Middle East peacemaking, while Ivanka has been an outspoken advocate within the White House on family and women’s rights issues.
Yet many in the media unfairly ridiculed Ivanka for her visible presence at Osaka, and for narrating the official White House video on the meeting between President Trump and Indian Prime Minister Narendra Modi.
Ivanka Trump was clearly being discriminated against by the media just because she was President Trump’s daughter. Just imagine the outcry if the media had dared to give the same disrespectful treatment just a few years ago to Chelsea Clinton.
After he returned to the White House late Sunday night, Trump looked back at his experiences in Japan and Korea with satisfaction. “So many amazing things happened over the last three days. All, or at least most of those things, are great for the United States. Much was accomplished!” Trump tweeted.
The next morning, Trump wrote, “It was great to call on Chairman Kim of North Korea to have our very well covered meeting. Good things can happen for all!”
STILL PUTTING AMERICA FIRST
While foreign policy experts and Trump’s critics claim that the president does not have a consistent approach to foreign affairs, his supporters disagree. They see him standing up and speaking on America’s behalf, without apology. They admire him for keeping his campaign pledge to always put America’s best interests first, and refuse to submit to the pressure to conform to the liberal globalist concepts of politically correct foreign policy.
Trump’s critics also don’t seem to understand the basic tactics of give and take which he uses routinely in his negotiations with America’s enemies over difficult issues, such as nuclear proliferation. Every time there is a report that Trump has offered a compromise on some demand, his critics are quick to accuse him of selling out his country, when in fact, he is just moving the negotiations forward towards his goal.
One example following Trump’s meeting at the border with Kim was a New York Times report that Trump might offer Kim a deal to “freeze” North Korea’s nuclear program. The report jumped to the conclusion that Trump was offering Kim the same kind of weak supervision on North Korea’s program which President Obama and Secretary of State John Kerry had offered to Iran in 2015.
IRAN ASKS EUROPE FOR HELP AGAINST US SANCTIONS
Meanwhile, Iran sought to blame Trump for its decision to deliberately violate the 300-kilogram (660-pound) limit on the amount of low enriched uranium it could hold, in accordance with the terms of the 2015 nuclear deal. While Trump was in Japan, the European signatories to the nuclear deal were attending a quarterly meeting in Vienna on Friday to find a way to keep the agreement alive. Iran has also warned the Europeans that if it does not get sanctions relief by July 7, it will break a second condition of the 2015 nuclear deal, by stepping up the concentration of uranium enrichment bringing it closer to weapons grade specifications.
Iran had asked them to defy the US embargo on importing Iranian oil, or at least help Iran establish an international line of financial credit that the US Treasury would be unable to shut down.
Britain, France and Germany have been trying to work out a complicated barter-type system known as INSTEX that would enable buyers and sellers of Iranian oil to exchange money without using the usual international channels for financial transactions that the US controls. Yet even if they get the barter system working, most European companies would not want to take the risk of getting caught trying to get around the Iranian oil embargo by US banking authorities.
Still, the US Special Representative for Iran, Brian Hook, speaking in London, publicly urged the Europeans to instead join the US in making the sanctions on Iran tougher in order to pressure Iran’s leaders to accept additional nuclear restrictions in the 2015 deal. He also repeated the warning to any nation buying Iranian oil that it will pay a price for its defiance of the US embargo.
Hook emphasized that a US war with Iran is “not necessary. We are not looking for any conflict in the region,” but added that the US would “respond with military force” if any of its personnel were attacked by Iranian forces harassing international oil tanker traffic passing out of the Persian Gulf through the Strait of Hormuz.
Meanwhile, speaking on the sidelines of the G20 meeting in Osaka, Trump said that there should be “no rush” to relieve the sanctions pressure on Iran. “There’s absolutely no time pressure,” he added, implying that eventually, the toughened sanctions on its oil exports will force Iran to renegotiate the nuclear deal.
During Trump’s meeting with German Chancellor Merkel in Osaka, she raised the growing tensions with Iran and asked Trump “how we can get into a negotiating process, which I advocated very strongly.”
Chinese President Xi also raised the Iran issue in his meeting with Trump, according to a report from a Chinese new agency. He warned that the Gulf region stands “at a crossroads of war and peace,” and that, “China always stands on the side of peace and opposes war.”
WHAT HAPPENS NEXT IN THE US-CHINA TRADE DISPUTE?
By the end of the Osaka G20 meeting, it was not clear how much progress had been made in resolving the US-China trade dispute. A Chinese Foreign Ministry statement declared that the Xi-Trump meeting had sent a “positive signal” to the entire world. But an editorial appearing in the China Daily, an English-language newspaper which often expresses the views of the Chinese government, offered a more guarded view of the outcome from the meeting.
“Even though Washington agreed to postpone levying additional tariffs on Chinese goods to make way for negotiations, and Trump even hinted at putting off decisions on Huawei until the end of negotiations, things are still very much up in the air,” the editorial cautioned.
“Agreement on 90 percent of the issues has proved not to be enough, and with the remaining 10 percent where their fundamental differences reside, it is not going to be easy to reach a 100-percent consensus, since at this point, they remain widely apart even on the conceptual level.”
The announcement by Xi and Trump following their Osaka meeting was almost identical to the one released after their meeting at the previous G20 summit last year in Argentina. But six months of talks that followed ultimately failed to reach an agreement, and today the stakes in the trade dispute are higher for both sides because of tariffs which have already been raised.
There is still no clear path to an agreement on the underlying issues which remain in dispute. In a Fox Business interview before the G20 summit, Trump said he was “very happy with where we are now,” suggesting that the current tariffs are “frankly not a very good thing for China, but it is a good thing for us.”
NO SENSE OF URGENCY NOW
There is also no apparent sense of urgency on either side to resolve the remaining disputes, as long as current tariff levels don’t escalate.
The lack of protection in China for intellectual property rights is still the most difficult sticking point. China sees little reason to give in to US demands to change its domestic laws protecting the intellectual property of foreign, and particularly American, companies. But US Trade Representative Robert Lighthizer, who has led the trade negotiations with China to date, is in no mood to compromise on the intellectual property issue.
Trump also does not want the level of tariffs on imported Chinese goods to escalate so close to the 2020 presidential election, because the ripple effects might put too much of a drag on US economic growth and the pocketbooks of US consumers.
Hundreds of US companies which feared the impact of the expansion of tariffs onto $300 billion of Chinese imports were relieved when Trump took that threat off the table in Osaka, potentially saving as many as two million American jobs. But those businesses still must deal with the 25% tariff on $200 billion worth of Chinese goods which went into effect in May and are not likely to be lifted before a final trade agreement is reached.
Peter Boockvar, the chief investment officer at the Bleakley Advisory Group, calls the current situation a “temporary timeout” of indefinite duration. Each side believes that time is on their side, which means that the current relatively low-level tariff war with China is likely to continue for the foreseeable future.
As for Trump’s 2020 re-election prospects, the outcome of the Osaka summit made it likely that there will be no major new tariff threats before Election Day, with economic growth likely to continue, albeit at a slower pace than last year.
The international economic outlook also appears to be stable, with few serious storm clouds visible on the horizon.
But after two and a half years in office, Trump remains as unpredictable as ever. He retains his ability to surprise, as we saw when he met the North Korean leader at the border on short notice, and his critics in the media as well as his political enemies still haven’t fully figured him out. So stand by, and prepare for more of the unexpected ahead.
