Trust but verify is my response to the latest deal that President Trump made with Chinese President Xi Jinping. Of course, that’s always the case with the Chinese, who can never be counted on to keep their promises. On the other hand, President Trump knows all about this and will without hesitation impose high tariffs on China if the country breaks its promise to stop fentanyl, hold back rare earths or not buy soybeans, oil or other commodities. For at least a year, China’s blackmail on rare earths will stop. It was seven years ago, at the G-20 in Buenos Aires, Argentina, when President Trump first asked Xi to stop using fentanyl, and Xi quickly said he would. But he didn’t. That was seven years ago. So here we are again. And to prevent hundreds of thousands more deaths from the deadly drug, Xi will hopefully keep his promise this time.
But let’s take a step back for a moment. In fact, one of Trump’s great achievements during his Southeast Asia trip was using trade deals as a key foreign policy tool to corner China. Supreme Court, please pay attention. Trade is inextricably linked to foreign policy. That is why IEEPA (International Emergency Economic Powers Act) is important in trade agreements with Australia, Japan, Vietnam, Malaysia, Cambodia and South Korea, including strict rules on Chinese transshipment, where they try to route their cheap exports and unfair trade practices hidden from other countries. All of that is prohibited in these trade agreements.
U.S. Trade Representative Amb. Jamieson Greer summarizes President Donald Trump’s trip to Asia and future trade goals in ‘Kudlow’.
Australia and Vietnam already have reserves of rare earths, and the other countries are developing them, as is the US. So the Chinese blackmail of rare earth metals will stop for a year. None of those countries are in love with China. The Supreme Court will undoubtedly understand that it is the Commander in Chief who has the power over foreign policy at the very moment he is developing international trade policy.
In some ways, this is the most important point made during this presidential trip. And Trump has outsmarted Xi. To be fair, US-China relations are de-escalating and Chinese tariffs will drop slightly from 57% to 47%. There will be no 100% fare surcharge. The question now is whether this is a new era of Sino-American cooperation. Or a next step in a managed decoupling strategy. Only time will tell.
I haven’t heard any discussion about a Chinese freeze on Russian oil purchases. We’ll see about that. It looks like the TikTok deal will go through.
But US Trade Representative Jameson Greer is sure to continue his 301 investigation into China’s broken promises on the US-China Phase One Trade Deal signed during Trump’s first term. President Trump rates this meeting as a 12 out of 10, which is quite high. I hope he’s right. But remember Reagan: trust but verify.
