When Donald Trump lands in South Korea later this month for the APEC summit, he will find the ground has significantly shifted. The shifting has been helped along by his own slapstick trade policies.
Trump has been treating America’s allies badly. The Americans have been complacent. They thought the US will continue to be the dominant player in Asia forever. They are in for a rude surprise.
We all know about how Trump treated India badly. That encouraged the world’s most populous country to rebuild its relations with China and Russia – fellow members in the emergent BRICS economic bloc. Prime Minister Modi was highly visible in last month’s parades in Beijing.
One European publication broke the news that Trump has been trying to get hold of Modi by phone. But the Indian leader would not take his call. In the summit on Gaza held a few days ago, Modi was noticeably absent. India sent a low-level minister to the gathering.
Last week, probably carried away by his own braggadocio, Trump announced he will be imposing a 100 percent tariff on China on top of existing ones in retaliation for new export controls imposed by Beijing. The New York stock exchange dropped sharply in response to the news.
Over the past few days, Trump has been trying to play down his new tariff threat. He had just ordered about $20 billion in subsidies for American farmers hit hard by his badly conceived trade war.
Since Trump initiated his insane trade war, China has not bought a single soy bean from American farms. The second most populous country shifted its importation of soy beans to Brazil and other countries that have been quietly preparing to supply the huge Chinese market in anticipation of America’s trade policy going awry.
China likewise shifted its beef importation to Australia. Because the Chinese market has suddenly become unavailable, American farmers are facing bankruptcy.
A couple of weeks ago, Japan’s prime minister Shigeru Ishiba resigned as a response to his political party’s electoral losses. The ruling LDP promptly chose 64-year-old Sanae Takaichi as the party’s new leader.
Apart from losing seats in the recent elections to the two chambers of Japan’s parliament, the LDP also saw its long-time partner, Komeito Party, leave the coalition. But as soon as it is able to muster a majority, Takaichi will be prime minister.
Takaichi will be the first female Japanese prime minister. She is seen as a protege of former prime minister Shinzo Abe. She represents the hard right in Japanese politics and has taken a tough stance on loosening immigration restrictions in a country whose population is aging rapidly.
Washington might have been reassured by the political rise of a hardline Japanese politician. But Takaichi, an admirer of former British prime minister Margaret Thatcher, is not about to be a Japanese version of Trump.
The Americans expected Takaichi to be a firm ally against China. But that was not to be. In her first press conference, Japan’s prime minister in waiting denounced Trump’s tariff pressures on China. She described Trump’s trade war as the most dangerous policy in this century.
Since she assumed her party’s leadership, Takaichi has been meeting with Japan’s industrial leaders. All of them thought that Japan’s industrial base will not survive Trump’s trade war. Listening intently to the captains of industry, Takaichi pronounced what some analysts are now describing to be Japan’s most dramatic policy shift since the end of World War II: the only way to save her country’s industrial might is to align with China.
China is, after all, Japan’s largest export market. Her industries rely on supply chains that run deep in China’s economy. Choosing China over the US is a most pragmatic choice.
In addition to standing by China against Trump’s insane tariff impositions, Takaichi is now proposing that China, Japan and South Korea form some sort of currency union to enhance regional trade and reduce dependence on the US dollar. This proposal seems to fit in with the BRICS’s long-term goal of establishing an alternative trading currency.
This will be a huge blow to the US currency. It is in peril of losing its status as the world’s reserve currency.
Trump has done his work in undermining the dollar. By interfering with the decisions of the US Fed, he threatens to politicize monetary policy decisions. This will torpedo international faith in the dollar – with all the unhealthy repercussions this brings to US economic performance.
The Trump administration responded to Takaichi’s dramatic policy shift with expected characteristic vitriol. They described Takaichi’s shift a stab in the back of an ally – strange words for a presidency that has been bullying Japan without regard for her strategic interests.
Trump’s minions are now threatening to pull out the US defense umbrella from Japan – and possibly, South Korea if Seoul goes along with Tokyo’s rethinking of the region’s strategic interests. That might be a hollow threat if China, Japan and South Korea get together as a unified trading alliance.
The ‘threat’ from China is, after all, an American invention to continue to subjugate her Asian ‘allies.’ Japan’s rethinking of her strategic options, as articulated by Takaichi, has been strongly supported by the Japanese people as recent polls show.
The bold rethinking going on in our neighborhood will leave the Philippines even more isolated.