In the US-China trade war, Korea, Japan, and Vietnam are targeting Europe as a trade bloc
As the trade war initiated by Trump is compressed into the US vs. China, it is focused on East Asia, where trading countries caught between the two countries are gathered, and Europe is showing signs of forming a trade bloc, and Korea, Japan, and Vietnam are the main targets of the conflict, causing stocks to plummet.
On the 22nd of last month, Foreign Minister Cho Tae-yeol held a meeting of the foreign ministers of Korea, Japan, and Japan at the Ikura Mission in Tokyo with Japanese Foreign Minister Takeshi Iwaya and Chinese Communist Party Central Foreign Affairs Office Director and Foreign Minister Wang Yi, and announced that they would “jointly seek” a solution to tariffs.
On the 30th, Xinhua News Agency reported that “at the Korea-China-Japan Economic and Trade Ministers’ Meeting in Seoul, China proposed that we jointly protect the multilateral trade system through regional economic integration such as the ‘Trilateral Free Trade Agreement (FTA)’.” The global financial market was shocked on the 7th, and Asian stocks plunged after the U.S. president said on the 6th that foreign governments would have to pay “a lot of money” to remove full-scale tariffs on what he called “medicines.”
Global stock markets plunged further on the previous day (5th) after China said it would retaliate against U.S. President Trump with an additional 34% tariff on U.S. goods, heightening fears of a looming recession and escalating the trade war.
Reuters said, “The trade war has caused the biggest market loss since the pandemic,” and Trump’s “medicines” and “paying a lot of money” remarks “have triggered more carnage.”
The New York Times’ London bureau chief analyzed on the 6th, “Historians point out that some conflicts, such as the War of 1812 and the Opium Wars of the mid-19th century, have their roots in trade disputes,” and “an all-out trade war between the U.S. and China would inflame an already unstable relationship.”
The New York Times continued, “China quickly went on the offensive by imposing a 34% retaliatory tariff on the 5th and adding that it could coordinate its response with neighboring countries Japan and South Korea,” and pointed out the spread of the trade dispute, saying, “The European Union (EU) is already warning countries that are not priced in the U.S. market not to dump cheap exports in their own markets.”
Simon Johnson, a professor at MIT’s Sloan School of Management and former chief economist at the International Monetary Fund (IMF), told the New York Times, “The Europeans could get closer to China and make up for a lot of Vietnam’s slack,” adding, “If that happens, a big country will emerge that is not a country other than the United States, and soon it will be a trading bloc.” Professor Johnson, who won the Nobel Prize in Economics last year, continued, “But I think the Europeans will not be happy about Chinese exports pouring into Europe. Where will this excess export go?” “A lot depends on how Europe decides to handle this issue.”
Professor Johnson said of the trade war situation, "The world trading system has been under pressure for some time, and that pressure has been symbolized in fact by the rise of China, and it has been more destructive than Japan in the 1980s." He pointed out that one common factor, whether in Asia or Africa, is that "almost every country that has escaped poverty has done so through trade."
That is why it is unlikely that the world will fall into a state of self-sufficiency where it tries to produce everything it needs within its borders, and such economic isolation is almost impossible in any case due to the nature of the global supply chain, from semiconductor factories in Taiwan to auto parts suppliers in Canada. The countries that will suffer the most from the trade war are low-income raw materials exporters, who have little leverage to respond to Trump, and some of them are in Africa, including Nigeria, which was hit with a 14% tariff by Trump, and Kenya and Ghana, which were hit with a 10% tariff.
Professor Johnson, along with Daron Acemoglu of MIT and James A. Robinson of the University of Chicago, have argued that some countries are more vulnerable than others. He won the 2024 Nobel Prize in Economics for his work on the colonial system that made them wealthy.
Some governments have already tried to work with the United States to avoid tariffs.
An Indian government official told Reuters that India has no plans to retaliate against the 26% tariff and that talks with the United States are ongoing about the possibility of a deal.
Taiwanese President Lai Ching-te said on Monday that he would remove trade barriers, proposing zero tariffs as a basis for talks with the United States, and that Taiwanese companies would increase investment in the United States.
Israeli Prime Minister Benjamin Netanyahu, a right-wing Israeli, said on Tuesday that he would seek a reprieve from a 17% tariff on Israeli goods during a scheduled meeting with Trump.
In Italy, Prime Minister Giorgia Meloni, a right-wing Trump ally, said in a video message to the general assembly of her coalition party, the League, on Tuesday that she would protect companies hurt by the planned 20% tariff on European Union (EU) goods. He said, "Of course we did not agree with the US decision, but we are ready to deploy all the tools necessary to support our businesses and sectors that may be disadvantaged in negotiations and economic terms," and "We strongly urge Europe to review the ideological restrictions of the Green Deal and excessive regulations in all sectors," declaring "deregulation."
Italian media reported that Prime Minister Meloni could meet Trump in Washington on April 14.
The New York Times reported on the 6th that Vietnam's top leader To Lam (General Secretary of the Communist Party) proposed to President Trump in a phone call that he would "lower tariffs on American imports to zero" and urged President Trump to do the same.
The New York Times reported that Vietnam said its tariffs on American goods averaged 9.4% in the call, and that President Trump later said the call was "very productive." Lam, the Communist Party's general secretary, was one of the first world leaders to reach out to President Trump after the 10% tariff was announced at the White House on the 2nd.
At a White House ceremony on the 2nd, President Trump announced that he would impose 10% tariffs on all trading partners except Canada and Mexico, and double-digit tariffs on dozens of countries that administration officials said had treated the United States unfairly, including 25% on South Korea and 24% on Japan.
The NYT said that the 46% tariff that the United States said it would impose on Vietnam was "a sharp contrast to the United States' recent embrace of Hanoi as a vital bulwark against China and a manufacturing destination for many American clothing brands," and that "Vietnam benefited from companies shifting manufacturing to China when President Trump imposed tariffs on China in his first term, and now Vietnam's urgent proposal for a 0% tariff reflects the fact that some international manufacturers in Vietnam may be tempted to move back to China." “China has more firepower and more scale,” Ben Bland, director of the Asia-Pacific program at Chatham House, a London-based think tank, told the Times. “So the fear is that in the medium term, you’re going to see things like electronics manufacturing basically move from Vietnam to China.” Even before Trump’s tariff announcement, Vietnam had signed a tentative deal to import liquefied natural gas from the United States, cut some tariffs on American imports, and allowed Elon Musk’s SpaceX to set up a company in Vietnam that could launch its Starlink satellite internet service. The Trump organization is developing a $1.5 billion golf course and hotel project in Lam’s home state, the Times reported.
On Monday, Japanese stocks plunged more than 8%, South Korean stocks fell 5%, and Australian shares fell more than 6%.
Analysts have repeatedly warned in recent memos that Asia could be particularly vulnerable to tit-for-tat tariffs between China and the United States. Many Asian countries, including South Korea and Japan, see both the U.S. and China as their top trading partners. Samsung Electronics, which makes most of its products in Vietnam, fell 4%, while Japan’s Nintendo, which delayed pre-orders for a sequel to its best-selling Switch handheld video game, fell nearly 5% and tumbled as much as 10% in early trading. “Logically, now would be a time when the world would come together to promote free trade,” Eswar S. Prasad, a professor of trade policy at Cornell University, told the Times. “Given the broader conflict between the U.S. and China, economic and financial relations have provided some degree of balance, but that balance is now breaking down.”
When asked about his plans for a third term in office in an interview with NBC News on Monday, Trump said, “There is a way to do it,” adding, “I’m not kidding.”
In 1980, the Republican Party's hard-line conservative President Reagan attempted to break the backbone of the socialist economic system with underproductivity through an extreme arms buildup and a nuclear war-themed game strategy with the Soviet Union. In an attempt to avoid war, the Soviet Union donated communist party assets to the state, dissolved the union, and became Russia through Perestroika, a "reconstruction strategy through elections." In the escalation of the war, air defense network tests became extreme and the KAL Flight 1983 was shot down on the Kamchatka Peninsula.
Reaganomics, the Republican strategy of oversupply to defeat socialism, failed in the tax cut policy due to oversupply in the supply-supply advantage, and the frequent riots and wars due to tax increases led to the financial crisis and the Democratic Party took power.