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Donald Trump shows off tariff list |
US President Donald Trump has returned to his second term and has once again used his old weapon—tariffs. On April 2, 2025, he declared a 'national economic emergency' and imposed new tariffs on all US trading partners under the International Emergency Economic Powers Act.
The decision, which took effect on April 5, imposes a 10 percent "baseline" tariff on all countries. However, additional tariffs are imposed on countries with which the US has a large trade deficit. These have risen to 34 percent for China, 24 percent for Japan, 25 percent for South Korea, and 32 percent for Taiwan.
What Trump thinks is that with these tariffs, he will protect the interests of US industry and jobs, and eliminate 'unfairness' in trade. But the reality is that his unilateral strategy may have the opposite effect. Especially East Asian countries are now looking to each other and, of course, China, instead of looking to the US.
The possibility of isolation in the United States
The economic structure of East Asia is becoming increasingly interdependent. Allied countries such as Japan, South Korea, and Taiwan have not bowed to unilateral pressure from the United States. Instead, they are focusing on strengthening trade relations among themselves and with China.
In this situation, regional trade alliances within the region, such as the Regional Comprehensive Economic Partnership (RCEP), the revised Trans-Pacific Partnership (CPTPP), and the long-stalled China-Japan-Korea Free Trade Agreement (CJKFTA), may gain momentum.
Trump may think this will make the United States stronger, but the reality is that he may be isolating his own country from the rest of the world.
Xi Jinping's long-distance running game
In such a situation, the name of Chinese President Xi Jinping comes up. He is not just the leader of China at the moment, but a cold-headed calculating strategist. He is in favor of being patient after understanding the situation. China has not yet taken any immediate retaliatory steps in response to Trump's aggressive trade policy. The Chinese Ministry of Commerce has said that they will take measures to 'protect national interests', but not now. There is a strategy behind this decision. Xi may be trying to turn the situation in his favor.
The Trump-Xi summit is likely to take place in June 2025. Before that, Xi is playing a calculated game rather than increasing pressure. His goal is clear. The United States itself is falling into the trap of its own tariffs. If China can use this time to establish its leadership in East Asia, that will be a real victory.
China is now very active diplomatically in this regard. Negotiations for a China-Japan-Korea Free Trade Agreement are gaining momentum again. China is also making some preparations to enter into a revised version of the Trans-Pacific Partnership Agreement. Here, the United States was previously leading the way.
Xi is quietly playing the game. Trump is pushing America's old friends toward China by imposing tariffs on one country after another. Meanwhile, Xi is quietly increasing his influence without making a sound.
Japan and Korea's dilemma, an opportunity for China
Japan is furious about the tariffs. It has invested $1 trillion in the United States, imported liquefied natural gas, cooperated with the United States on defense, and even allowed its domestic company Nippon Steel to buy American steel companies. Despite all this, Japan is still hit with a 24 percent tariff.
While Japan has not retaliated directly against the US tariffs, it is now intensifying trilateral trade talks with China and South Korea.
The situation in Korea is complicated. There is unrest in the country's political leadership. The president has been impeached. There is a debate about martial law. Several interim presidents have come and gone in the meantime. In this situation, it is not possible to give a diplomatic response. However large companies like Samsung and Hyundai are trying to avoid tariffs by increasing US investments.
Yet South Korea could not avoid the 25 percent tariff. On top of that, the United States has imposed a 46 percent tariff on imports from Vietnam. Korean companies manufacture many products in Vietnam. In this situation, South Korea is now forced to get closer to China and Japan.
Taiwan is most at risk
Taiwan is in the most vulnerable position. Despite being close to the United States, they are now the victim of a 32 percent tariff. Their government has expressed anger at this decision, calling it 'unfair'.
On the other hand, the Taiwanese government is constantly moving towards conflict with China. They are taking steps such as declaring China an 'enemy state' and severing mutual relations. China is also responding with military exercises.
China's exercises around Taiwan have become more ferocious this year. The Chinese navy has practiced striking bases and ports and energy infrastructure off Taiwan's coast.
But the biggest blow has come from the technology sector. Taiwanese semiconductor manufacturing companies are moving $100 billion in investments to the United States to avoid US tariffs. However, this has left Taiwan losing its special importance in the global technology supply chain.
US strategy or suicidal decision?
Trump's argument is that he is protecting the US economy and national security. Trade deficits, currency devaluations, VAT discrimination—all have hurt the US.
But is Trump's strategy really working? Rather, it seems that these tariffs are isolating the US.
The Regional Comprehensive Economic Partnership now controls 30 percent of the world's GDP. There is also talk of China's entry into the Trans-Pacific Partnership, which was once created by the US to contain China. Now that is out of the US's hands.
China, Japan, and Korea are coming closer again. Their meetings in Tokyo and Seoul on March 22 and 30 sent a message that they would tackle this tariff crisis together.
Last words: Xi Jinping is waiting
Xi believes that time will speak for him. He is quietly continuing the game. Trump is pushing old US friends toward China by imposing tariffs on one country after another. Meanwhile, Xi is quietly increasing his influence without making any noise.
In this 'long game', Trump may win a little bit of the time. But control of the field is gradually passing into the hands of that mysterious, silent, but calculating leader; Xi Jinping.
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