How Trump's North Korea pact may affect China tariffs
President Donald Trump has had some mighty eventful days on the world stage this week. The administration left Quebec and the G-7 meeting Sunday, withdrawing from the joint communique and lashing out at the U.S.'s closest allies. Bearing the brunt of that attack was Canada and Prime Minister Justin Trudeau in a fury of tweets and TV appearances as Mr. Trump headed to Singapore for Monday's momentous U.S.-North Korea summit.
So as the administration plays hardball with allies and nice with Kim Jong Un, analysts are paying close attention to how all this might affect yet another front in Mr. Trump's global offensive: his proposed tariffs on China, announced formally last month.
The Trump administration plans to release on June 15 a detailed list of its 25 percent tariffs on $50 billion in Chinese imported goods, which will be "imposed on those imports shortly thereafter," the White House said in a statement last month. Included will be goods tied to Beijing's "Made in China 2025" plan.
Here are a few things to consider about China, North Korea and tariffs:
Either the U.S. or China may use North Korea as leverage
North Korea "negotiations from here are certain to have fits and starts, but help the president's hand in the near-term focus on securing a deal with China by putting the pressure on Xi Jinping to engage with Trump or face increased U.S. influence in the region," Raymond James analyst Ed Mills wrote in a note to clients.
Yet depending on how things unfold, the North Korea negotiations could weaken the U.S. position, Height Capital's Clayton Allen wrote in a note.
"While negotiations are vastly preferable to the tensions from earlier this spring, we view the lack of substantial preparatory work prior to this round as a factor that could limit U.S. influence over subsequent talks with North Korea and in future trade negotiations with the Chinese," Allen wrote. Additional North Korea negotiation rounds, and the pressure they'll put on Secretary of State Michael Pompeo for results, will also come into play.
"Already, South Korea, China, and Russia are looking at ways to increase economic cooperation with North Korea ahead of any significant and permanent concessions from Kim," Allen wrote. "If talks degrade in future rounds, this would serve to limit U.S. ability to apply 'maximum pressure' on North Korea, thereby limiting future leverage."
The Trump administration can delay tariffs for six months
If U.S. officials think a delay will help, they can postpone them for six months under the Sec. 301 statute that allows the tariffs in the first place. That scenario "appears increasingly possible," Allen wrote.
Proposed ZTE legislation bears close watching
The White House, in addition to the tariffs, plans to announce investment restrictions and "enhanced export controls" by June 30 for Chinese "persons and entities related to industrially significant technology," according to its statement last month.
A bipartisan group of senators including Tom Cotton, R-Arkansas; Chris Van Hollen, D-Maryland; and Chuck Schumer, D-New York filed an amendment to the defense bill now under consideration that would prohibit the federal government from using ZTE or Huawei equipment or services "and that they receive no taxpayer dollars."
"Although it has been included in the Senate version," Mills wrote, "we view this as a way to avoid a full fight on the issue where Senators are forced to vote on the record for the provision -- giving greater flexibility to alter or remove the provision during conference negotiations later this year."
