Meridian Reads: Missiles, Sanctions and the Trade War

Has it been a good weekend, Meridian Readers? We sure hope so. Now it’s time to kick up your feet and settle in for you weekly dose of diplomatic news. Let’s jump in.

North Korea’s missile tests raise stakes for Trump’s personal diplomacy with Kim

Publication: The Washington Post | By Anne Gearan

• There’s nothing like relaxing on a Sunday and reading about nuclear missiles, right?
• Here’s the deal: After a pretty long hiatus, North Korea has returned to missile testing. Uh-oh.
• What does this mean for the United States?
  • For starters, this raises the stakes for President Trump ahead of planned nuclear negotiations, undermining his claim that his personal relationship with dictator Kim Jong Un has reduced the threat from North Korea and made Asian allies safer.
• And what does the White House have to say about this?
  • Not much. Officials have had a muted response to the short-range ballistic missile tests conducted over the past week, including what the South Korean military described as the firing of “unidentified short-range projectiles” early Friday morning local time. Trump did argue that this doesn’t break a pledge Kim made to him that he would not test intercontinental ballistic missiles because they’re short-range missiles. “We never discussed that. We discussed nuclear,” Trump told reporters.
• Before tests conducted over the past week, Trump had regularly touted a lull of more than 18 months without a North Korean nuclear or long-range missile test as a chief achievement of his un­or­tho­dox outreach to Kim.
• So, what happens now? According to Trump, no one knows.
  • “My relationship with Kim Jong Un is a very good one, as I’m sure you’ve seen,” Trump said Tuesday. “We’ll see what happens. I can’t tell you what’s going to happen.”

Trump administration imposes sanctions on Iran’s top diplomat

Publication: The New York Times | By David E. Sanger and Michael Crowley 

• On Wednesday, the Trump admin placed sanctions on Mohammad Javad Zarif, Iran’s foreign minister.
• The impact of this is pretty severe— it essentially cuts off the clearest avenue for talks with Iran. 
• Treasury Secretary Steven Mnuchin, who had hinted at the move weeks ago, said it was intended to send a message to Iran.
  • “Javad Zarif implements the reckless agenda of Iran’s supreme leader and is the regime’s primary spokesperson around the world,” he said on Twitter.
  • Senior administration officials described the foreign minister, Mohammad Javad Zarif — an American-educated diplomat who is well connected throughout the United States — as the “propaganda arm” of Iran’s supreme leader, Ayatollah Ali Khamenei.
• A senior Trump administration official suggested that Mr. Zarif had been afforded too much credibility over the years, saying that “the United States has decided enough is enough.”
• No one is quite sure what this means for future talks with Iran, but tensions are definitely running high.

As U.S. and China duke it out in tariff war, other nations emerge as winners

Publication: The Washington Diplomat | By John Brinkley

• Several countries are doing well because of the U.S.-China trade war, but the United States and China aren’t among them.
• Since the U.S. and China attacked and counterattacked each other last year with punitive tariffs, Vietnam has been the big winner, with Cambodia, Thailand and other countries benefiting as well.
• So, how come this is happening?
  • China-based manufacturers have moved their operations to countries in Southeast Asia and elsewhere because the combination of rising labor costs in China and U.S. tariffs has gotten to be too much for them.
• The impacts in these countries have been significant:
  • U.S. imports from Vietnam totaled $25.8 billion during the first five months of 2019, compared with $18.9 billion during the same period in 2018, according to the U.S. Census Bureau.
  • Cambodia exported $1.5 billion worth of goods to the United States during the first five months of 2018 and $1.9 billion between Jan. 1 and May 31, 2019. Its trade surplus with the U.S. went up from $1.3 billion to $1.7 billion.
  • Thailand, Chile, Malaysia, South Korea and Argentina also exported more goods to — and increased their trade surpluses with — the United States, in whole or in part because of President Trump’s punitive tariffs on $200 billion worth of Chinese imports, imposed in June 2018.
• However, this whole thing may not be legal.
  • Some of the import increases from Asian countries may be the result of illegal transshipment, whereby a product is built in one country, shipped to another country, then sent on to the United States with the intermediate country listed as the country of origin to skirt tariffs.
  • “We’ve heard that there are Chinese and non-Chinese companies looking to do this,” said Lenny Feldman, a Miami-based trade lawyer with the firm Sandler, Travis & Rosenberg. “We’ve gotten a lot of questions about it from companies asking if they could do it and we tell them no.”
• Even with the legal questions, Larry Kudlow, a senior economic advisor to President Trump, said the United States and China may never agree on a trade deal, so these numbers may continue to rise.
  • Whether to go back to China “depends on how much investment they’ve made in the new location,” Niederhoff said. In many cases, “there’s probably not a compelling reason to go back.”

That’s it for this week, folks. We’ll see you next time.