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한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском AbstractPurpose The purpose of this paper is to analyse the international political economy of Korea and its effects due to geopolitical tension between China and the USA. Design/methodology/approach Economic war between China and the USA has prolonged longer than expected. Aftermath of the COVID-19 pandemic, reforming the supply chain has been the centre of economic tension between China and the USA. Quite recently, with the rapid expansion of Chinese e-commerce platforms, distribution channels come upon a new economic tension between the two. And now is the time to pivot its pattern of conflict from competition into cooperation. In this end, economic diplomacy could be a useful means to give a signal of cooperation. From the view of economic diplomacy, this paper tries to analyse the projected transition of economic war between China and the USA with its implication on the trade policy of Korea. Findings As an implementation of economic diplomacy, China suggested the Belt and Road Initiative (BRI), enhancing trade logistics among related countries to gain competitiveness. In 2023, the Biden administration suggested the India-Middle East and Europe Economic Corridor as a counter to BRI, which will be a threshold for changing trade policy from economic war into economic diplomacy. As a result, it is expected China and the USA will expand their economic diplomacy in a way to promote economic cooperation among allied states, while the distribution channel war would continue to accelerate the economic tension between China and the USA. Korea has to prepare for and provide measures handling this geopolitical location in its trade policy or economic diplomacy. Originality/value This research contributes to the awareness and understanding of trade environments from the perspective of economic diplomacy. 1. Introduction The advent of globalisation has led to widespread economic integration, creating global production networks and markets. However, the COVID-19 pandemic has acted as a significant setback to this trend. In the wake of COVID-19, an economic war has arisen between China and the USA, centred on the restructuring of global supply chains following widespread disruptions. International political economy (IPE) examines the power dynamics between states and the structures of influence within regional economies. Consequently, economic diplomacy has gained unprecedented attention. Economic diplomacy focuses on government actions regarding international economic issues, distinct from political diplomacy through its market-oriented approach in foreign policy. Putnam (1988) categorises economic diplomacy into two levels: unilateralism and bilateralism. Unilateral economic diplomacy (or unilateralism) often relies on hard power, involving decisions on trade liberalisation or market protection without negotiation. Bilateral economic diplomacy (or bilateralism) or multilateral economic diplomacy (or multilateralism), by contrast, involves negotiation among trade partners, resulting in agreements such as regional or global free trade agreements (FTAs). A vast range of state or non-state actors engage in economic diplomacy, navigating the complex interplay between international and domestic factors. Defining economic diplomacy is extremely challenging, but one useful definition is “the broad concept of economic statecraft, where economic measures are taken in the pursuit of political goals, including punitive actions such as sanctions” (Blanchard and Ripsman, 2008).  Figure 1 Recent trend of economic diplomacy To exert influence internationally, ministers and heads of government strive to demonstrate their capacity for national security through two primary approaches, as shown in Figure 1 (above): economic war (or competition) and economic diplomacy (or international cooperation). In the context of global supply chain restructuring, the economic conflict between China and the USA has intensified, marked by threats of supply chain disruptions. This has led to emerging strategies aimed at “crowding out” the USA from global supply chains (去美戰略) or excluding China through alliances such as the Allied Supply Chain and Chip 4. While economic war is inherently “temporary” due to its painstaking nature, economic diplomacy or international cooperation offer a more “long-term” approach because it is gains-taking. This paper analyses the factors contributing to the prolonged nature of this economic war and explores potential outcomes of the supply chain tensions between China and the USA from the perspectives of IPE or geo-economics. In conclusion, it highlights the importance of preparing for trade policy adjustments and strategic economic diplomacy. 2. International trade war and strategic items2.1 Supply chain The supply chain encompasses a network of interconnected suppliers involved in each stage of production, from raw materials and components to the finished goods or services. This network can include vendors, warehouses, retailers, freight stations and distribution centres. Effective supply chain management is a “crucial process because an optimised supply chain results in lower costs and a more efficient production cycle” [1]. Within the supply chain, a leading company typically holds governance power, enabling it to coordinate scheduling and exercise control across the interconnected suppliers, resulting in reduced costs and shorter production times (Gereffi et al., 2005) [2]. Since the 2000s, forward and backward integration have been key strategies for managing time, cost and uncertainty in supply chains. For example, Toyota’s Just-In-Time (JIT) system demonstrated the efficiency of locally concentrated supply chains until disruptions from the 2011 East Japan Earthquake and the Thailand flood. Following supply chain shutdowns in 2020, many businesses shifted from local to global supply chains, utilising advancements of the information technology (IT) and transportation technologies to geographically diversify operations. As the need for a systematically functioning global supply chain has grown, a leading nation, much like a leading company, often assumes governance power in international trade and investment, as illustrated in Figure 2 (below), by aligning with the leadership of a dominant market competitiveness, which makes this leadership valuable.  Figure 2 Supply chain The COVID-19 pandemic dealt a severe blow to the global supply chain, causing sudden lockdowns that led to widespread supply chain disruptions. To mitigate the risks of future global disruptions, supply chains have begun restructuring to operate on a more regionally segmented basis. In this shift toward regional supply chains, China and the USA are at the centre, drawing allied countries within their spheres of influence. This alignment helps explain why the economic war between China and the USA has lasted longer than anticipated. 2.2 Strategic items China has restricted exports of two rare metals, gallium and germanium, which are critical to semiconductor production. Kraljic (1983) highlighted the importance of managing “strategic items” within the framework of supply chain management, as shown in Figure 3. Kraljic emphasises the need to strengthen and diversify critical items. The Kraljic matrix provides a valuable tool for identifying essential items that require focused management within the supply chain.  Figure 3 Kraljic matrix Kraljic identified the importance of managing “bottleneck items” in strategic supply chain management – items that present high supply risk but have relatively low business value. Due to the potential costs associated with non-delivery or compromised quality of strategic items, these must be closely monitored and controlled. From a risk management perspective, establishing medium-term business relationships and collaboration with suppliers is essential. For example, South Korea imports over 90% of its urea for agricultural and industrial purposes from China [3]. Heavily dependent on China for urea supplies due to pricing factors, Korea faced challenges when China imposed export controls on urea, underscoring Korea’s vulnerability within China’s sphere of influence. The European Union (EU) also faces challenges with critical raw materials (CRMs). China remains the EU’s sole supplier of processed rare earth elements, while Chile supplies 79% of its lithium. In response, the EU introduced the CRM Act (CRMA) to support projects aimed at increasing “the EU’s capacity to extract, process, and recycle strategic raw materials and diversify supplies from the third countries” [4]. 2.3 Resilient supply chain alliance In contrast to China’s approach of leveraging supply disruptions to strengthen its influence, the Biden administration in the USA has adopted a cooperative approach focused on building resilient supply chains (Pillar 2) through the Indo-Pacific Economic Framework (IPEF), which includes 14 member countries [5]. The need for resilient supply chains has been further underscored by the Russia–Ukraine crisis. The IPEF aims to address supply chain vulnerabilities by fostering global efforts to reduce risks associated with concentrated, fragile supply chains [6].  Figure 4 Resilient supply chain alliance In Figure 4, the EU Commission presented the Single Market Emergency Instrument (SMEI) in September 2022, a crisis governance framework designed to ensure the availability of essential goods and services during future emergencies. The SMEI operates on three levels: contingency planning, vigilance and emergency. The contingency planning phase focuses on collaboration among member states to mitigate supply chain disruption and monitor incidents. The vigilance phase can be activated when a significant disruption is anticipated, enabling specific measures such as mapping and monitoring supply chains and production capacities. Finally, the emergency phase is activated in cases of severe disruption to the functioning of the single market [7]. Establishing a resilient supply chain through international cooperation may be appealing, yet the reality often falls short of the ambition. In South Korea, the IPEF took effect on 17 April 2024, after an extended negotiation process, marking the first multilateral agreement on supply chains. As a result, during non-crisis periods, the 14 member countries will collaborate to strengthen international trade, investment and trade logistics. In times of crisis, member countries will activate a “crisis response network”. Conversely, opportunities for negotiation with China, South Korea’s largest trading partner, are essential for building supply chain resilience [8]. China has pursued an industrial policy focused on enhancing its supply chain management capabilities. In the semiconductor sector, the decoupling between China and the USA has become increasingly evident. Contrary to expectations, China has adopted a policy of internalising its supply chains, returning to the integration strategies of the 2000s rather than furthering globalisation. A promising opportunity for transformation between the two countries has emerged recently. Since 2015, China and South Korea have maintained bilateral FTA, and with the second phase of FTA negotiations currently underway, there is an opportunity to strengthen trade and investment ties, fostering positive progress through international cooperation. 2.4 China manufacturing exodus During the COVID-19 pandemic, China imposed sudden lockdowns without prior notice or preparation, halting production and logistics cycles. This “zero COVID” policy may have triggered a shift towards “de-risking” China from supply chain disruptions. Although China still offers significant advantages as “the factory of the world,” with vast market potential, prolonged trade tensions with the USA, intensified during the Trump administration, have prompted global manufacturers with substantial USA market bases to relocate operations amid rising geopolitical uncertainties. For example, Nike and Adidas have shifted much of their footwear manufacturing to Vietnam, Apple has begun iPhone production at a Foxconn in Chennai, India, and AstraZeneca has contracted production with India’s Serum Institute. In the pre-globalised era, defining the Rule of Origin (ROO) was straightforward, as a product’s components were usually manufactured and assembled within a single country. However, with the complexity of global supply chains, particularly since 2012, determining ROO has become a time-consuming and subjective process. ROO are classified as either non-preferential or preferential. The USA applies non-preferential ROO to restrict imports from countries like Cuba, Iran and North Korea, while offering trade preference programmes for others. Preferential ROO are used to determine duty-free eligibility for imports from approved countries [9], whereas non-preferential ROO play a crucial role in “country of origin labelling, government procurement, enforcement of trade remedy actions, compilation of trade statistics, supply chain security issues.” [10] China manufacturing exodus may negatively impact capital inflows into Hong Kong, traditionally seen as the Gateway to China. In 2023, Hong Kong’s initial public offering volume fell to a 20-year low of $5.9bn [11]. While China-oriented business remains in Hong Kong, which returns fully to Chinese control in 2047, non-China-oriented businesses have migrated to Singapore. As the certainty of contract and ownership rights forms the foundation of capitalism, this capital flight from Hong Kong is likely to persist. 3. Trade logistics and economic corridors Globalisation has allowed supply chains to leverage interdependence and interconnectedness, maximising efficiency. However, while these efficiencies have been beneficial, they have also created a fertile ground for friction between trade partners due to a “survival of the fittest” mindset and the principle of “winner takes all.” This interdependence has also highlighted vulnerabilities; the global supply chain struggled to manage the disruptions caused by COVID-19, prompting a shift towards regional integration initiatives, such as Association of Southeast Asian Nations, Regional Comprehensive Economic Partnership, United States–Mexico–Canada Agreement and Comprehensive and Progressive Agreement for Trans-Pacific Partnership. As the global economy seeks stability, collaboration over competition has become increasingly essential, with economic diplomacy emerging as a priority. The prolonged economic war between China and the USA arguably needs to shift towards economic diplomacy. The global supply chain is restructuring into regional supply chains, building resilience by operating in regional segments that can withstand crises. Michael Porter introduced the concept of value chain as “a set of activities that a firm performs to deliver a valuable product or service to the market.” [12] Complex finished goods often depend on global value chains, traversing multiple countries. As shown in Figure 5, the value chain consists of supply chain and trade channel components. While the focus has traditionally been on which country holds lead status within a regional supply chain, the emphasis is now shifting to how these regional segments can be interconnected and relayed. In this context, the supply chain competition may evolve into a “channel war” in international trade, where trade logistics will centre on the internal flow of goods, standardising channel processes and establishing authority over these channels.  Figure 5 Supply chain v. trade channel 3.1 Trade logistics It is natural for governments to seek environments that enhance competitiveness within in their countries. In terms of trade, effective trade logistics are essential for maintaining competitive advantage. As a prerequisite, a strong IT management infrastructure is indispensable. As shown in Figure 6, trade logistics encompass the internal flow of goods to market, integrating physical infrastructure with operating software – such as transport hubs, warehouses, highways, ports, terminals, trains and shipping vessels. Key areas of conflict in trade logistics involve the standardisation of channel processes and determining who holds governance over operation of these logistics systems. This is equally relevant within the digital economy. Recently, Chinese e-commerce – often referred to as C-commerce – has aggressively sought to gain control over digital distribution channels, interconnected delivery networks and trade logistics via digital platforms. Chinese platforms such as Taobao, Temu and AliExpress are actively working to increase their monthly active users (MAUs), positing themselves as counterweights to USA-based platforms such as Amazon and eBay in digital trade [13].  Figure 6 Trade logistics When the agenda of establishing international trade logistics is introduced to relevant trade members across various countries, initial progress and effective responses are often achieved. However, efforts soon encounter obstacles related to standardising logistics processes and establishing operational governance. Greater reliance on international institutions could help resolve these issues (Bayne, 2017). Yet governments frequently prioritise domestic interests, and after prolonged negotiations, the risk of international agreements failing increases. Amid the economic war between China and the USA, China launched a trade logistics initiative known as the Belt and Road Initiative (BRI), or One Belt One Road, in 2013. Often referred to as the New Silk Road, the BRI aims to establish economic corridors for trade logistics. The World Bank estimates that the BRI could boost trade flows by 4.1% and reduce trade costs by 1.1% [14]. In response, the Biden administration proposed the India-Middle East and Europe Economic Corridor (IMEC) in September 2023 to strengthen transport and communication links between Europe and Asia as a countermeasure to China’s BRI. IMEC has been well received by participating countries, with expectations of fostering economic growth, enhancing connectivity and potentially rebalancing trade and economic relations between the EU and China [15]. Both BRI and IMEC are ambitious projects aimed at boosting international trade through substantial investments in trade logistics infrastructure. Each seeks to assert governance over international trade channels, signalling that the supply chain war may soon evolve into a trade channel war between China and the USA. 3.2 Economic corridors Economic corridors are transport networks designed to support and facilitate the movement of goods, services, people and information. These corridors often include integrated infrastructure, such as highways, railways and ports, linking cities or even countries (Octaviano and Trishia, 2014). They are typically established to connect manufacturing hubs, high-supply and high-demand areas, and producers of value-added goods. Economic corridors comprise both hard infrastructure – such as trade facilities – and soft infrastructure, including trade facilitation and capacity-building measures. The Asian Development Bank introduced the term “economic corridor” in 1998 to describe networks connecting various economic agents within a region [16]. Economic corridors are integrated trade logistics networks, providing essential infrastructure for connecting regional segments of supply chains. As supply chains increasingly operate in regional “chunks,” linking these segments becomes ever more important. Economic corridors typically include a network of transport infrastructure, such as highways, railways, terminals and ports. Initiatives like the BRI and IMEC use economic corridors as instruments of economic diplomacy, shifting strategies from hard power to soft power, as shown in Figure 7. Because less-developed or developing countries often lack sufficient funding to invest in trade logistics, they tend to welcome these initiatives from developed countries, which offer international collaboration and support. However, these initiatives usually come with the condition that participating countries must accept standardised trade processes and governance led by the sponsoring developed country.  Figure 7 Economic corridor initiatives as economic diplomacy To succeed, economic corridors must meet three key conditions [17]. First, government intervention is essential, as economic corridor initiatives primarily involve public infrastructure investments beyond the scope of the private sector. In realising these projects, governments must reconcile three tensions to ensure their policies are mutually supportive: tensions between politics and economics, between international and domestic pressures and between governments and other stakeholders. Second, intermediate outcomes should be measured and demonstrated as results of economic corridors, allowing participants to experience tangible benefits throughout these longer-term projects. Finally, economic corridors should deliver broader benefits. Participants need incentives to utilise the infrastructure sustainably. These benefits may extend beyond economic welfare, such as wages and income, to include social inclusion, equity and environmental gains, which support the long-term viability of the infrastructure. 4. BRI vs IMEC4.1 Belt and Road Initiative (BRI) - Silk Road The BRI can be a modern-day realisation of the Silk Road concept, connecting Europe as a market base with China as a production base. Unlike the ancient Silk Road, which connected trade routes across Eurasia, the BRI poses potential challenges due to its extensive connectivity. Firstly, there are social and environmental externalities, such as increased congestion and accidents from concentrating traffic flows through limited links and nodes within trade networks. Secondly, while the connectivity may benefit the production and market bases at either end, regions situated between these hubs, through which highways and railways pass, may gain minimal advantage. Thirdly, there is often a mismatch between where costs and benefits are realised. Transit regions that facilitate network traffic often see fewer direct benefits compared to high-density nodes within the network. 4.2 India-Middle East and Europe Economic Corridor (IMEC) - The Spice Road The ancient Spice Roads once connected the Middle East and Northeast Africa with Europe, facilitating the exchange of goods such as cinnamon, ginger, pepper and cassia, which, like silk, served as a form of currency. The IMEC proposes a modern route from India to Europe through the United Arab Emirates (UAE), Saudi Arabia, Israel and Greece. Since its announcement in September 2023, some regional experts have expressed reservations about its feasibility, particularly regarding the connection between the Middle East and Israel. The project has faced delays due to the Israel–Hamas war. Despite these challenges, IMEC holds potential to drive economic growth and strengthen connectivity, especially as countries like Vietnam and India emerge as alternative manufacturing bases for companies relocating from China. For Saudi Arabia and the UAE, IMEC is not viewed as a challenge to China but rather as an opportunity to diversify their economies and solidify their roles within the Middle East region [18]. 5. Conclusion A new trade war between China and the USA has begun, with the Biden Administration’s introduction of IMEC as a counter to China’s BRI. This shift could soon transform the nature of economic war from a focus on supply chains to one on trade channels. The China manufacturing exodus was further accelerated by supply disruptions during the COVID-19 pandemic. Amidst the economic tensions between China and the USA, the restructuring of global supply chains into regional networks has made significant progress. With China maintaining its stance on export controls for strategic items, South Korea must prepare for resilient supply chain management. In relation to China–Korea FTA, which is currently undergoing its second phase of negotiation, South Korea should seek clarity on the transparency of China’s strategic item controls. The Committee on Foreign Investment in the United States (CFIUS) plays a key role in monitoring the quality of inbound investments; similarly, South Korea is experiencing increased inbound investment due to the manufacturing shift from China and should apply similar standards to evaluate investment quality. This emerging economic war between China and the USA is now marked by the competing initiatives of the BRI and IMEC. The BRI can be viewed as a modern Silk Road, linking China with Europe, while the IMEC seeks to establish a trade logistics corridor connecting Saudi Arabia, the UAE, Israel and Greece. The South Korean Government should take proactive steps to prepare for the evolving dynamics of the trade war between China and the USA. CitationOh, J.S. (2025), "International trade war - Spice Road against Silk Road", International Trade, Politics and Development, Vol. 9 No. 1, pp. 2-11. https://doi.org/10.1108/ITPD-06-2024-0031  Notes 1. https://www.investopedia.com/terms/s/supplychain.asp2. According to Gary Gereffi et al, 5 governance types of a lead company could be categorised as market, modular, relational, captive and hierarchy.3. Korea imports urea from 12 countries including Qatar, Vietnam, Indonesia and Saudi Arabia, in addition to China.4. https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials/strategic-projects-under-crma_en5. IPEF was launched on May 23,2022 at Tokyo. 14 member countries are Australia, Brunei, Fiji, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, Vietnam and the USA. 4 Pillar of IPEF are Trade (Pillar 1), Supply Chain (Pillar 2),Clean Economy (Pillar 3) and Fair Economy (Pillar 4).6. Critics say “lack of substantive actions and binding commitments, instead focusing on process-driven framework building.” https://www.piie.com/blogs/realtime-economics/its-time-ipef-countries-take-action-supply-chain-resilience7. https://ec.europa.eu/commission/presscorner/detail/en/ip_22_54438. As of 2023, the first-largest trade partner of Korea is China (Trade volume of $267.66bn), the second is the US ($186.96bn) and the third is Vietnam ($79.43bn)9. As preferential ROO contain the labour value content requirement in the USMCA, it could increase compliance costs for importers. https://crsreports.congress.gov/product/pdf/RL/RL3452410. USITC(1996), Country of Origin Marking: Review of Laws, Regulations and Practices, USITC Publication 2975, July, pp. 2–411. https://www.barrons.com/articles/hong-kong-financial-center-china-46ba5d3612. Porter identifies a value chain broken in five primary activities: inbound logistics, operations, outbound logistics, marketing and sales and post-sale services. https://www.usitc.gov/publications/332/journals/concepts_approaches_in_gvc_research_final_april_18.pdf13. MAU is a metric commonly used to identify the number of unique users who engage with apps and website. MAU is an important measurement to the level of platform competitiveness in the digital trade logistics or e-commerce industry.14. https://home.kpmg/xx/en/home/insights/2019/12/china-belt-and-road-initiative-and-the-global-chemical-industry.html15. https://www.bradley.com/insights/publications/2023/10/the-india-middle-east-europe-economic-corridor-prospects-and-challenges-for-us-businesses16. The Asian Development Bank (ADB), which first used the term in 1998, defines economic corridors as important networks or connections between economic agents along a defined geography, which link the supply and demand sides of markets. http://research.bworldonline.com/popular-economics/story.php?id=350&title=Economic-corridors-boost-markets,-living-conditions17. Legovini et al. (2020) comments traditional cross border agreements of transport investment focuses only on a narrow set of direct benefits and cost. However, economic corridors can entail much wider economic benefits and costs such as trade and economic activity, structural change, poverty reduction, pollution and deforestation.18. Arab Centre Washington D.C. https://arabcenterdc.org/resource/the-geopolitics-of-the-india-middle-east-europe-economic-corridor/ References Bayne, N. (2017), Challenge and Response in the New Economic Diplomacy, 4th ed., The New Economic Diplomacy, Routledge, London, p. 19.Blanchard, J.M.F. and Ripsman, N.M. (2008), “A political theory of economic statecraft”, Foreign Policy Analysis, Vol. 4, pp. 371-398, doi: 10.1111/j.1743-8594.2008.00076.x.Gereffi, G., Humphrey, J. and Sturgeon, T. (2005), “The governance of value chain”, Review of International Political Economy, Vol. 12 No. 1, pp. 78-104, doi: 10.1080/09692290500049805.Kraljic, P. (1983), “Purchasing must be supply management”, Harvard Business Review, Vol. 61 No. 5, September.Legovini, A., Duhaut, A. and Bougna, T. (2020), “Economic corridors-transforming the growth potential of transport investments”, p. 10.Octaviano, B.Y. and Trishia, P. (2014), Economic Corridors Boost Markets, Living Conditions, Business World Research, Islamabad, October.United States International Trade Commission (USITC) (1996), “Country of origin marking: Review of Laws, Regulations, and Practices”, USITC Publication, Vol. 2975, July, pp. 2-4.Further readingPorter, M. (1985), Competitive Advantage: Creating and Sustaining Superior Performance, Free Press.Putman, R.D. (1988), “Diplomacy and domestic politics; the logic of two-level games”, International Organization, Vol. 42 No. 4, pp. 427-600.USITC (2019), “Global value chain analysis: concepts and approaches”, Journal of International Commerce and Economics, April, pp. 1-29.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Abstract Observers have noted that Washington’s policy of ‘strategic ambiguity’ aims not only to deter China from attacking Taiwan but also to keep Taipei from taking actions that may be deemed provocative by Beijing leaders. Remarks and actions taken by former United States President Joseph Biden seem to place America’s long-held ambiguous policy in doubt. It has been argued that a clear security commitment from Washington is likely to bolster Taiwan citizens’ unrealistic expectations of America’s defence support and their calls for independence, which will certainly invite Beijing’s violent responses. Employing the theory of deterrence and survey data collected in Taiwan during the past 20 years, this article examines this argument. The analysis shows that the policy of strategy ambiguity remains crucial for the peace and stability across the Taiwan Strait. As China has increasingly turned itself to become a revisionist, Washington’s policy requires a recalibration, and the adjustment does not have to be a binary choice between ambiguity and clarity. Donald Trump’s return to the White House with his transactional approach to international affairs makes US policy towards the Taiwan issue less predictable, potentially leading to a volatile Taiwan Strait during his second term. Introduction One of the key aspects of US policy towards Taiwan since 1979 has been its ambiguous posture. With an objective of maintaining cross-strait peace and stability, Washington’s policy is based on its version of the ‘one-China’ policy, the Taiwan Relations Act (TRA), the three United States–China communiques and ‘Six Assurances’ (Congressional Research Service, 2024). Under this framework, Washington acknowledges that there is only one China and maintains an unofficial relationship with Taipei. The United States supports Taiwan with weapons of a defensive character and will ‘resist any resort to force or other forms of coercion that would jeopardise the security, or the social or economic system, of the people on Taiwan’ (TRA, Section 2(6)) but it does not clarify what would trigger an American military response. The deliberate uncertainty about whether the United States would intervene in cross-strait conflicts distinctively characterises Washington’s policy of strategic ambiguity. Former United States President Joseph Biden’s repeated security pledges to Taiwan since taking office in 2021 seem to place this policy in doubt. Biden’s response to a reporter of CBS 60-Minutes was unequivocal. When being asked, ‘So unlike Ukraine, to be clear, sir, US forces—US men and women—would defend Taiwan in the event of a Chinese invasion?’ Without hesitation, Biden replied, ‘Yes, if in fact, there was an unprecedented attack’ (Pelley, 2022). Although White House officials later repeatedly indicated that America’s policy towards Taiwan had not changed, Biden’s remarks generated a new round of discussion (e.g., Benson, 2022; Christensen et al., 2022) since this was the fourth time that the President made such a pledge.1 Critics point out that Washington’s deliberate ambiguity about America’s military intervention is not merely designed to deter China from attacking Taiwan. By intentionally being vague on its defence commitment, the policy also intends to keep Taipei from taking actions that may be deemed provocative by Beijing leaders (Bush, 2006). Survey data have consistently shown that few on the island are willing to be ruled by the Chinese Communist government and the majority would opt for independence if a war with China can be avoided (Hsieh & Niou, 2005; Wang, 2017). An unconditional security guarantee from Washington is likely to bolster Taiwan citizens’ unrealistic expectations of America’s defence support and their calls for independence. Because Taiwan is a democracy, the popularly elected Taipei government could take aggressive actions under public pressure, which will certainly invite Beijing’s military attacks and drag the United States into an unwanted war with China. Employing the theory of deterrence and survey data collected in Taiwan during the past 20 years, this article attempts to examine this logic with the following research questions: What is the logic behind Washington’s policy of strategic ambiguity? Why is there a call for clarity in the first place? And, what are the concerns about a policy of clarity? What would Donald Trump’s second term as the President of the United States mean for Washington’s policy on Taiwan? The Functioning of Strategic Ambiguity Fierce fighting broke out between troops led by the Nationalist Party (Kuomintang or KMT) and the Chinese Communist Party (CCP) on the Chinese mainland at the end of the Second World War. Under the weight of corruption, the KMT government suffered a disastrous military defeat and retreated to the island of Taiwan. As geopolitical tension mounted, Washington signed a mutual defence treaty with Taipei to contain the expansion of Communism. Several major battles were fought in the 1950s and 1960s across the Taiwan Strait. With America’s assistance, Taipei thwarted Communist military attacks on offshore islands held by Taiwan. The 1970s saw a shift in China’s strategy away from a reliance on the ‘military liberation’ of the island to a wave of ‘peaceful initiatives’ for China’s unification. However, Chinese leaders continue to regard Taiwan as a renegade province and have refused to recognise it as an equal and legitimate negotiating partner. Attempting to coerce Taipei into acceptance of the unification formula known as ‘one country, two systems’, Beijing has repeatedly warned that it would use ‘any means it deems necessary, including military ones’ (State Council of the PRC, 1993). Taipei’s loss of United Nations (UN) membership in 1971 and the normalisation of relations between China and the United States in 1972 signified Beijing’s decisive diplomatic victory. China’s growing importance in international affairs has led many countries, including the United States, to break diplomatic relations with Taiwan. After the United States and China established official ties in 1979, Washington has maintained an ‘unofficial’ relationship with Taipei. With an aim to maintain cross-strait peace and stability, the policy of strategic ambiguity was gradually articulated in the subsequent years and has become America’s key policy towards the Taiwan issue. In essence, strategic ambiguity is a policy of deterrence aiming to prevent a target state from taking unwanted actions. The deterrent effect is accomplished by the deterring state’s threat of taking actions that will potentially deny the target state’s expected gains or punish it to the extent that the costs of the unwanted acts exceed the gains it hopes to acquire. In order to be effective, the deterring state needs to show that it (a) possesses sufficient retaliatory capability to deny the fruits of unwanted actions; and (b) has the resolve to use the force so that the target state is persuaded that the threats are credible (Chan, 2003; Christensen, 2002; Wang, 2010). As the world’s only superpower, few countries can withstand the weight of American power if it were deployed against them. Washington has also demonstrated that it has the resolve to use force, as the 1995–1996 Taiwan Strait Crisis has shown. Triggered by Beijing’s military exercises and missile tests aiming to intimidate Taiwan voters on the eve of the island country’s first popular presidential election, the Clinton administration responded by dispatching two aircraft carrier battle groups to the vicinity of Taiwan. Although some may question Washington’s resolve due to the perceived decline of American power, wars in Iraq and in Afghanistan still serve as reminders of its resolve of deploying military might. Previous literature has demonstrated that credible threat is not sufficient to deter unwanted behaviour, as an effective deterrence also needs convincing assurance (Christensen, 2002; Christensen et al., 2022; Schelling, 1966). The target state will have little incentive to comply with the deterring state’s demand if it believes that it will ultimately lose its principal values. This is why various United States administrations have repeatedly assured Chinese leaders that Washington does not support Taiwan independence lest Beijing use force to realise its cause of unification for fear of Taiwan’s permanent separation from China. The flip side of this logic is to remind Taipei that America’s security commitment is not without conditions. The goal is to discourage Taiwan from taking aggressive actions towards independence, which will certainly provoke military attacks from China. Thus, the potential of taking actions to impose costs that outweigh the benefits of an unwanted action is a form of deterrence. The prospect of inaction can also exert a deterrent effect as it can raise the expected cost of unwanted acts of the target state. Washington’s ambiguous posture is said to have the effect of ‘dual deterrence’ (Bush, 2006). On the one hand, it deters Beijing from using military force against Taiwan since Chinese leaders are unsure if Washington would be involved militarily. On the other hand, it dissuades Taipei from pursuing de jure independence so that cross-strait military conflicts can be avoided. Through a web of incentives and disincentives, Washington’s strategic ambiguity has been praised as one of the most successful foreign policies as it has maintained cross-strait peace and stability for several decades. Why the Call for Clarity? If Washington’s policy has been effective, why are there calls for change? The answer lies in China’s revisionist behaviours, which have become increasingly assertive and aggressive. Indeed, deterrence diplomacy is effective only when targeted actors are conditional revisionists. Christensen (2002) provides a useful typology of different political actors for analysis. Countries like Japan, France and the United Kingdom (UK) are ‘unprovokable friends’ of the United States. They may be annoyed with Washington’s policies from time to time, like France’s fury over a submarine deal after Australia cancelling a multi-billion-dollar order with a French company and turning to the United States and the UK for a new contract (Sanger, 2021). The governments of these countries have no intention to challenge America’s fundamental national interests. Nor does Washington see them as potential threats. While deterrence diplomacy is not needed for unprovokable friends, there are also ‘undeterrable ideologues’ to whom the threat of deterrence is futile. Political actors like Hitler’s Germany and Osama bin Laden’s Al-Qaeda network are determined to pursue their political objectives and simply cannot be dissuaded. In addition to unprovokable friends and undeterrable ideologues, there is a third type of political actor—‘conditional revisionists’. They are willing to exploit opponents’ weaknesses in order to change the status quo but would refrain from taking action unless opportunities arise. Because the deterring state can hold the target state’s prized possessions hostage while at the same time provide convincing assurance, the latter has the incentive to comply with the former’s demands. This logic underlies the success of strategic ambiguity because, for much of the time since 1979, China did not possess the capabilities to directly or indirectly coerce Taiwan or challenge America’s deterrence policy. The world has witnessed a different China since the end of the twentieth century as the country has experienced rapid economic expansion. Figure 1 shows that China’s annual GDP growth rates between 1981 and 2023 generally ranged from 7.5% to 10%. With its enormous economic resources, Beijing has launched an effort to modernise its military. During the 20-year period between 1989 and 2010, as Figure 2 demonstrates, China’s military expenditures as a percentage of government spending were between 7% and 17%, far exceeding those of Japan, France and the UK. In addition to acquiring new weapon systems, the People’s Liberation Army has also developed anti-access area denial capabilities, raising concerns among American officials (Maizland, 2020; Olay, 2024). Such capabilities aim to neutralise the United States and its allies’ ability to project power in the Western Pacific region, including in the area close to Taiwan. Beijing, in recent years, has aggressively expanded its military presence in the South China Sea (Centre for Preventive Action, 2022), engaged in border disputes with India, and constructed military outposts in Bhutan (Barnett, 2021). China has also built numerous ‘re-education camps’ in Xinjiang, engaged in ‘serious’ human rights violations against Uyghurs and other Muslim minorities in the region (UN Human Rights Office of the High Commissioner, 2022) and imposed repressive responses to the pro-democracy movement in Hong Kong (Wang, 2023). With Beijing’s continuing alignment with Moscow after Russia’s invasion of Ukraine, Chinese leaders have shown to the world that they are willing to defy international opinions and forcefully assert their growing power inside and beyond China’s boundaries.  Figure 1. China’s GDP Growth Rate: 1961–2023.Source: World Bank Group (various years-a).  Figure 2. Military Expenditure by Country as a Percentage of Government Spending: 1989–2023.Source: SIPRI (various years). In this context, aggregated national power has increasingly shifted to Beijing’s favour over the past decades. Figures 3 and 4 juxtapose Taiwan’s and China’s gross domestic product and total military expenditures since the late 1980s. Prior to 2000, as Figure 3 shows, China’s annual GDPs were only two to four times larger than Taiwan’s, but the ratio has expanded to more than 10 times since 2008. By 2010, China overtook Japan to become the world’s second largest economy, far exceeding Taiwan’s economic productivity. Meanwhile, China’s military spending has been 10–20 times that of Taiwan’s since 2009, as Figure 4 demonstrates. After Chinese leaders invalidated their promises of a ‘high-degree of autonomy’ to Hong Kong under the unification plan, observers believe Taiwan is their next target (Lopez, 2022). Since Tsai Ing-wen of the pro-independence Democratic Progressive Party (DPP) was elected Taiwan’s president in 2016, Beijing has furthered its effort of isolating Taipei internationally and escalated its belligerent behaviours by repeatedly dispatching naval vessels and warplanes circulating the island and violating its Air Defence Identification Zone (ADIZ; refer to Ministry of National Defence R.O.C., various years). In recent years, Chinese leaders further heightened their military pressure by repeatedly launched live-fire drills in water close to Taiwan, frequently with a record number of military aircraft and naval vessels (Ng & Wingfield-Hayes, 2024). China’s rapid technological advancement also allows it to infiltrate Taiwan’s IT infrastructure (Lonergan & Mueller, 2022). These developments have led to a warning from United States Navy Admiral John Aquilino in 2021 that China could be prepared to take Taiwan by force by 2027 (Lendon, 2021).  Figure 3. Ratio of China and Taiwan Gross Domestic Productivity: 1991–2023.Source: World Bank Group (various years-b) and National Statistics, R.O.C. (Taiwan) (various years).  Figure 4. Ratio of China and Taiwan Military Expenditures: 1989–2023.Source: SIPRI (various years). Observers, therefore, have noted that China is no longer a conditional revisionist but has turned into a revisionist that has the ability and intention to change the status quo. Some in the United States argue that ambiguity is unlikely to deter an increasingly assertive and threatening China towards Taiwan. Instead, they maintain, ‘[t]he time has come for the United States to introduce a policy of strategic clarity: one that makes explicit that the United States would respond to any Chinese use of force against Taiwan’ (Haass & Sacks, 2020). This is a view that the Biden administration also holds. Characterising China as a revisionist with both the intent and the ability ‘to reshape the international order’, the Biden administration acknowledged that China is the greatest challenger to the United States and its allies (White House, 2022, p. 23). Because ‘we cannot rely on Beijing to change its trajectory’, it is upon Washington to ‘shape the strategic environment around Beijing’ (Blinken, 2022). Thus, supporting Taiwan and strengthening its defence capabilities are crucial for America’s response to China’s growing coercion. Observers also point out that Washington’s ambiguous posture, while aiming to discourage unwanted actions of targeted states, may lead to miscalculation and risky behaviours. Leaders in both Beijing and Taipei have ‘obvious incentives to misrepresent their true perceptions concerning United States resolve’ (Kastner, 2006, p. 662). The tendency is particularly strong for Chinese leaders as the equation that previously made ambiguity a feasible policy has changed. Rather than maintain stability, it is argued, ambiguity may contribute to cross-strait instability and drag the United States into an unwanted conflict with China. In addition, no response to a Chinese military invasion of a democratic Taiwan would damage Washington’s reputation as the guardian of democracy and create the perception that the United States is not a reliable partner (Schmitt and Mazza, 2020). If American allies in the region conclude that Washington can no longer be counted on, they would be likely to accommodate Beijing’s demands as a result. Alternatively, some in the region may band together to balance a rising China, leading to tension and instability in one of the most dynamic areas of international commerce. Both would threaten America’s interests in the region and hurt Washington’s global leadership. Beijing’s forceful takeover of Taiwan would mean that China could then project its naval power beyond the first island chain, directly threatening the maritime security of the United States and its allies. Taiwan’s autonomy has also become a vital geopolitical interest and a national security issue for the United States due to the island’s dominant role in the semiconductor manufacturing market. It is estimated that the United States and other countries would lose access to 85% of all leading-edge microprocessors if China were to invade Taiwan tomorrow (Fadel, 2022). Beijing’s threatening military exercises, after United States House Speaker Nancy Pelosi’s visit to Taipei and the inauguration of pro-independence Lai Ching-te as Taiwan’s president, further underscore the need of revising the policy of strategic ambiguity. There have been a number of developments in the first Trump administration reflecting the growing sentiment that Beijing’s revisionist behaviour needs a robust and unambiguous response, including an unambiguous support for Taiwan. These included dispatching cabinet-level officials and military officers to Taipei and selling a large quantity of advanced weapons to Taiwan. The United States Congress also passed the Taiwan Travel Act of 2018 and the Taiwan Allies International Protection and Enhancement Initiative (TAIPEI) of 2020. The former permits high-level United States officials to travel to Taipei and meet their Taiwanese counterparts, while the latter aims to assist Taiwan in maintaining existing diplomatic relations. After Biden took office in 2021, his administration has further pursued a coherent and comprehensive approach for ‘broadening and deepening’ United States–Taiwan relations. It includes inviting Taiwan’s de factor ambassador to the United States as an official guest to the presidential inauguration (Blanchard, 2021), dispatching a delegation to Taipei sending a ‘personal signal’ of support from the President (Brunnstrom & Martina, 2021), providing large packages of arms sales (Chung et al., 2024), strengthening bilateral economic ties, and re-confirming Taiwan’s status as a major non-NATO ally (US Government Publishing Office, 2022). All of these efforts aim to advance the island country’s security, prosperity and respect in the international community. The Biden administration’s efforts to internationalise the Taiwan issue have been further noted. Wording like ‘the importance of peace and stability across the Taiwan Strait’ was mentioned at the United States–Japan (White House, 2021b), United States–Korea (White House, 2021a), Japan–Australia (Prime Minister of Australia, 2022) and G7 summits (European Council, 2021). For the first time, the issue of Taiwan’s security has been included in the communique of so many major powers’ summit meetings, which shows the Biden administration’s effort of building an international coalition to constrain a threatening China that will benefit Taiwan. In this context, Biden has repeatedly vowed to defend Taiwan, indicating that the United States would intervene militarily in the event of a Chinese invasion, prompting many to speculate if Washington has changed its long-standing policy of strategic ambiguity. Issues with Clarity Critics point out that a policy of strategic clarity involves risks. Chief among those is a clear security pledge like the one given by Biden, which is likely to bolster Taiwan citizens’ unrealistic expectation of America’s defence support, which will then motivate the public’s calls for independence. Under public pressure, the popularly elected Taipei government could take aggressive actions and will provoke a violent reaction from Beijing. Meanwhile, the public’s overconfidence does not match America’s military actions that would support an ally or a friend (Benson, 2022). The Biden administration’s decision to provide Ukraine with security assistance but refrain from putting American boots on the ground clearly demonstrates Washington’s reluctance to undertake direct military intervention in overseas conflicts. Taiwan citizens’ impracticable confidence in the United States’ defence commitment may destabilise the cross-strait relationship and bring harm to the island country. Thus, some pundits consider Biden’s move towards a policy of clarity ‘reckless’ (e.g., Beinart, 2021). The above concern is a valid one. Figure 5 presents the trend of public preferences on Taiwan’s international status during the past two decades. The top two dashed lines show that roughly 15%–35% of Taiwanese citizens prefer the status quo indefinitely, and about one-third of them are ‘undetermined’ regarding the island’s future status in the international community. The middle two solid lines show that there is a small but increasing proportion of respondents prefer to keep the status quo now but move towards independence in the future, and that proportion has increased quite dramatically since 2018. An even smaller and declining proportion of them favour unification as a final goal. The bottom two dashed lines indicate that less than 10% of the island’s residents want to pursue immediate unification or independence. Taken together, the figure demonstrates that very few on the island want to be ruled by the Chinese Communist government as it is now. The vast majority of them want to maintain the status quo and prefer either a ‘kinder, gentler’ version of de facto independence, that is, maintaining status quo forever, or a permanent separation from China in the future.  Figure 5. Taiwan Citizens’ Position on Independence and Unification: 1994–2024.Source: Election Study Center, National Chengchi University (January 13, 2025). While Taiwan’s citizens prefer to preserve their democratic way of life, they understand the pursuit of independence will encounter violent reaction from China. Figure 6 shows that the majority of the public express a preference for de jure independence if cross-strait conflicts could be averted, but support for independence declines substantially if they believe that Beijing would launch an attack on Taiwan.2 Figure 7 also shows that 50%–60% of island citizens consistently believe that the United States will come to Taiwan’s defence if China launches an attack. The level of confidence is particularly high among supporters of the ruling DPP, which has a plank of pursuing Taiwan’s de jure independence. The above figures reveal that the public’s preferences over the island’s future relations with China are consistently conditioned by perceived risks. That is, they will refrain from declaring Taiwan’s independence if it involves such high risks as warring with China. The conditionality of Taiwanese citizens’ preferences indicates that, collectively, they are conditional revisionists; that is, they would refrain from taking actions unless opportunities arise. In addition, the public is highly confident that the United States will come to Taiwan’s aid if there is a cross-strait military conflict. Thus, strategic clarity is likely to further bolster Taiwan citizens’ unrealistic expectation of Washington’s security commitment as well as their support for policies that may be deemed provocative by Beijing leaders.  Figure 6. Support Independence With/Without War With China, 2003–2024.Source: Program in Asian Security Studies (Various years).  Figure 7. Taiwan Citizens’ Confidence in United States Security Commitment: 2003–2020.Source: Program in Asian Security Studies (Various years). The above findings appear to validate the concerns of proponents of strategic ambiguity, but a recent study with panel data collected on the island may alleviate such a concern (Wang & Cheng, 2023). Contrary to our expectations, Taiwanese citizens’ confidence in Washington’s security commitment has not increased but, in fact, decreased after Biden’s security pledges. The decline in confidence was mainly due to the pro-independence respondents’ shifting views. As noted, supporters of Taiwan independence historically have a higher level of confidence in America’s security commitment, which is cognitively consistent with their determination of pursuing the island country’s permanent separation from China. The war in Ukraine may be an awakening call for them as it demonstrates the Western hesitancy to undertake direct military intervention in overseas conflicts. The United States can have similar avoidance in a situation involving Taiwan. Despite Biden’s verbal assurance, actions speak louder than words. Pro-independence citizens’ shifting attitudes thus explain the declining confidence in Washington’s security commitment, which can also soften their calls for aggressive actions towards independence. Because panel analysis has long been considered one of the best ways of examining persistence and change of individuals’ attitudes, the results of the study are worth noting. Another identified pitfall of strategic clarity is that it signals what one ‘is prepared to take a risk for’ and ‘what one would ignore’ (Chang-Liao & Fang, 2021, p. 51). Given the heavy costs and uncertain outcomes, Chinese leaders are likely to avoid launching direct military attacks on Taiwan. Instead, they have employed and may continue to employ such ‘grey zone’ tactics as imposing economic sanctions on Taiwanese products, attacking the island’s information technology infrastructure, violating the island’s ADIZ and conducting military exercises for a de facto blockade. Without embarking on a conventional invasion of Taiwan that a policy of clarity intends to deter, these ‘low-intensity’ tactics can nonetheless have the effect of exhausting Taipei’s resources and eroding its resolve. Rather than discouraging Beijing’s aggressive and threatening behaviours, strategic clarity could undercut the effect of Washington’s deterrence policy. Such a criticism is also a legitimate concern, but it ignores the fact that Beijing embarked on grey zone approaches against Taiwan long before recent calls for clarity. This means that without setting a clear threshold for intervention has not stopped Chinese leaders from taking low-intensity provocations. China’s increasing clout and the perceived decline of America’s relative power seem to be the underlying factors to Beijing’s aggressive behaviour. Chinese leaders are apparently counting on Washington being ‘reactive and risk-averse’ (Sussex & Moloney, 2021). It will be incumbent on the United States to show its determination to confront China with coordinated responses. America’s policy of strategic ambiguity, therefore, remains crucial for cross-strait peace and stability, but it needs to be recalibrated. As China increasingly turns out to be a revisionist power, it is necessary for Washington to adjust its ambiguous posture in order to counter Beijing’s increasingly belligerent behaviour. The recalibration does not have to be a binary choice between ambiguity and clarity. Both policies can be treated as two ends of a continuum and can be adjusted accordingly. Given Beijing’s intense pressure campaign, Washington can step up its commitment to help Taiwan to defend itself for protecting democracy and America’s national interests. These measures include the development of a ‘porcupine’ defence strategy by enhancing Taipei’s asymmetric warfare capability, building military stockpile and forming an effective civil defence. Washington can also expand Taiwan’s integration with the international community lest Beijing employ its grey zone tactics to further isolate Taipei and deepen the island’s economic vulnerability. Ultimately, a successful deterrence policy will also depend on Washington’s convincing assurance that it would not support Taiwan’s pursuit of independence. Chinese leaders have a deep suspicion that the United States has a covert attempt to undermine China’s unification with Taiwan. America’s recalibration of its policy of strategic ambiguity is likely to be interpreted as a confirmation of their suspicion. If Beijing leaders believe that America’s policy will lead to Taiwan’s permanent separation from China, they are unlikely to submit to Washington’s demands. Trump 2.0 Donald Trump’s 2025 return to the White House for a second term as the president of the United States has added uncertainty to the policy of strategic ambiguity. Observers have noted that Trump is sceptical of the value of friends and allies as well as the benefits of international partnerships and alliances (Bush & Haas, 2024). Under the slogan of ‘America First’, he removed the United States from the Trans-Pacific Partnership (Lobosco, 2018), the Paris Climate Accord (White House, 2017, 2025a), the Intermediate-Range Nuclear Forces (INF) Treaty (Pompeo, 2019) and the UN Human Rights Council (White House, 2025b) and has mandated a comprehensive review of all international organisations to determine if the United States should withdraw its membership from or end its support for these organisations (White House, 2025b). He repeatedly admonished members of NATO, South Korea and Japan for not paying enough for United States protection (Reuters, 2024). His contempt for alliances and security partnerships has upended decades of American international engagement. In this context, two developments have direct implications for Taiwan. First, Trump has expressively suggested that the United States acquire Greenland (Erlanger & Smialek, 2025), take control of the Panama Canal (New York Times, 2025), and annex Canada as the 51st state of the United States (Colvin, 2025). His ambition for territory expansion has alarmed the world community3 and undermines an international principle that borders should not be changed through force or coercion. Trump’s threat regarding Greenland, the Panama Canal and Canada could potentially embolden Chinese leaders to consider taking Taiwan by force (Sacks, 2025). Second, unlike Biden’s emphasis on the defence of democratic values in his support for American allies, Trump has taken a transactional approach to international affairs. His dealing with the Russo–Ukrainian conflict is a case in point. The Trump administration has placed heavy pressure on the Ukrainian government to sign over a huge portion of its mineral wealth to the United States in exchange for helping the country to defend itself (Taub, 2025). Some speculate that Trump’s alignment with Russia represents a strategy of ‘reverse Kissinger’ aiming to counter China’s rise (Editorial Board, 2025). Though such a strategy may potentially benefit Taiwan, many on the island are nevertheless alarmed by the Trump administration’s approach to the conflict, questioning if they can continue to count on American support (Buckley & Chien, 2025). Because Trump has expressed his desire to negotiate a broad economic deal with Beijing (Swanson, 2025), the Chinese government may offer concessions on a trade deal in exchange for Washington’s positions on Taiwan without Taipei’s involvement. Indeed, Trump has expressed scepticism about Taiwan’s value compared to China (Llorente, 2024). He previously also questioned America’s ability to defend the island country (Bolton, 2020). Even though the State Department recently removed the long-standing phrase that ‘[w]e do not support Taiwan independence’ from its Taiwan factsheet (US Department of State, 2021), leading some to speculate if it represents a strategic shift (Tao, 2025), Trump’s dubious attitude about the island country was fully displayed in a previous interview. Speaking in a transactional tone, Trump argued that ‘Taiwan should pay us for defence’ because ‘we’re no different than an insurance company. Taiwan doesn’t give us anything’. He also complained that Taiwan had taken ‘almost 100%’ of the chip industry from the United States (Kharpal, 2024). In response to Trump’s inimical demands, by displaying Taiwan’s tangible value to the United States, the Taipei government has pledged to increase its defence spending to 3% of Taiwan’s gross domestic product (Office of the President, Republic of China [Taiwan], 2025). The Taiwan Semiconductor Manufacturing Company (TSMC)—the world’s largest chip manufacturer that produces the most advanced semiconductors—also announced plans to invest an additional $100 billion to expand its operations in the United States (Tang & Price, 2025).4 While the investment announcement was viewed favourably by Trump (Chung & Lee, 2025), it may be interpreted by Chinese leaders as a lack of resolve on the part of his administration due to Trump’s scepticism and versatile mindset. Given that credible threat is key to deterrence policy, the future and effectiveness of strategic ambiguity in Trump’s second term will be uncertain.ConclusionThe Taiwan Strait has been described as ‘the most dangerous place on Earth’ (Economist, 2021). A military conflict between China and Taiwan will have significant consequences. In addition to causing damage and human suffering on both sides, such a conflict could escalate into a direct confrontation involving two nuclear powers, threaten regional stability in East Asia, and undermine the prosperity of one of the most dynamic regions in the global economy. Washington’s policy of strategic ambiguity has been effective in maintaining cross-strait peace and stability for several decades, but a recalibration is necessary due to an increasingly powerful and assertive China. Instead of changing to a policy of strategic clarity, the United States can adjust its ambiguous posture through strengthening Taiwan’s defence capabilities and advancing its international integration. By assuring that Washington seeks regional peace and stability, not Taiwan’s independence, the effects of the deterrence policy can be maintained, and risks of cross-strait military conflicts can be minimised. Trump’s return to the White House nevertheless has disrupted America’s traditional foreign policy of promoting freedom and democracy. Although he has not clarified the administration’s position on America’s support for Taiwan, his transactional approach suggests that he might use the cross-strait relationship as leverage over Beijing. Washington’s policy towards Taiwan is expected to be less predictable, potentially leading to a volatile Taiwan Strait during Trump’s second term. Declaration of Conflicting Interests The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.FundingThe author received no financial support for the research, authorship and/or publication of this article.Footnotes1. Biden previously provided such an assurance in May of 2022 (Kanno-Youngs & Baker, 2022), October of 2021 (Hunnicutt, 2021) and August of 2021 (ABC News, 2021). 2. The attempts to explore the conditionality of Taiwanese residents’ policy preferences include Hsieh and Niou (2005), Niou (2004) and Wu (1993, 1996). 3. There have been strong public reactions in Canada to Trump’s threats to make Canada the 51st state of the United States. 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China relies heavily on Malaysia as a bridge for cooperation, dialogue, and coordination with the Gulf Cooperation Council (GCC) countries and China in confronting the economic and political challenges imposed by the United States on China and many countries around the world after President “Trump” increased US tariffs on China. To this end, China seeks to coordinate with Malaysia during its presidency of the (ASEAN Summit) this year 2025, and its concurrent presidency of the (ASEAN-GCC Cooperation Summit), a situation China is keen to capitalize on through its distinguished partnership with Malaysia. In addition, Chinese President Xi Jinping's visit to Malaysia in mid-April 2025, during which they issued a joint statement on support for Gaza and the Palestinian cause in the face of Israeli violations.  Malaysia's meetings and its current hosting of the (ASEAN Summit and the ASEAN-GCC Cooperation Summit) come after important trade talks between the United States and China in Switzerland in May 2025, the same month as the ASEAN and ASEAN-GCC Cooperation Summits with China. The ASEAN-GCC Summit may be a real opportunity to lay the foundation for deeper negotiations between the world's two largest economies after a period of escalation in the trade war between the two sides.  Given the importance of the ASEAN region to Southeast Asia, which represents China's vital backyard, it is at the heart of the strategy for managing major events between Washington and Beijing in the Indo-Pacific region. To this end, Washington and Beijing signed a strategic partnership agreement with ASEAN, given its critical importance to both countries.  Former US President Joe Biden signed a new Comprehensive Strategic Partnership agreement between the United States and the Association of Southeast Asian Nations (ASEAN), describing it as a decisive step toward addressing the biggest issues of our time. Meanwhile, Beijing emphasized strengthening the Comprehensive Strategic Partnership agreement it signed with ASEAN in 2021, with China keen to jointly build the world's largest free trade area.  The most prominent complex global issues on the agenda of ASEAN countries, China, Malaysia, and the Gulf Cooperation Council (GCC) in their confrontation with Washington and Russia include (the war in Ukraine, climate change, regional tensions around the Taiwan Strait and the South China Sea, North Korea's missile launches, the recent Gaza war, and US tariffs), among others.To this end, China officially confirmed Chinese Premier Li Keqiang's visit to Malaysia in late May 2025 to attend a summit coordinated by China with a newly formed group of Southeast Asian and Arab countries, through which Beijing hopes to garner support in the face of Washington's tariffs. China also launched a campaign to mend relations with the European Union, Japan, and South Korea, after US President Donald Trump imposed a series of tariffs on numerous countries on April 2, 2025, before abruptly suspending them for dozens of countries except China.  Chinese Premier “Li Keqiang” will also be in Kuala Lumpur, Malaysia, to attend the (ASEAN-GCC-China Summit) on May 27, 2025, which will be held one day after the ASEAN Summit scheduled for May 26, 2025. China has not publicly confirmed the names and number of Chinese officials who will comprise the Chinese delegation it will send to Malaysia before the summits in Malaysia.  From my analytical perspective, this may stem from China's fear that the United States and its ASEAN allies will exert pressure on those Chinese figures who will participate in the (ASEAN-GCC Summit) in particular.  In my view, Chinese President Xi Jinping's visit to Malaysia in mid-April 2025 is linked to the role Malaysia will play, along with its ally China, in confronting US protectionist policies. This follows President Xi Jinping's visit to three Southeast Asian countries (Vietnam, Malaysia, and Cambodia) to win them over to China's side in its trade war with the United States. To this end, China is seeking to win Malaysia over, particularly at this time, as Beijing intensifies its current efforts to secure partnerships to protect its economy from the escalating trade war with the United States. While the three countries (Vietnam, Cambodia, and Malaysia) will benefit from Chinese President Xi Jinping's visit in mid-April 2025 to diversify their Chinese supply chains, it also places them in a challenging position with the US, and in the crosshairs of US President Trump as he seeks to restrict the reshipment of Chinese goods to its regional neighbors and then transport them through them to the world.  In anticipation of all stages of US escalation against China, Chinese President “Xi Jinping” convened and chaired the Central Working Conference on Diplomacy with Neighboring Countries in early May 2025. This conference highlighted China's increasing focus on strengthening regional relations, particularly with its neighbors, most notably Malaysia and its ASEAN partners.  On the other hand, there is competition between the United States, China, and Europe to enhance economic presence at the joint summit between the Malaysia-led ASEAN and the Gulf Cooperation Council (GCC) in Kuala Lumpur, Malaysia. The GCC countries are in fierce competition with the United States, Russia, China, and Europe to strengthen their economic presence in the vibrant ASEAN, which holds promising opportunities in multiple fields for the Gulf community. The ASEAN summit with the Gulf states and China represents an important milestone that reflects the growing interest of the leaders of the Gulf Cooperation Council (GCC) in strengthening relations with the ASEAN countries and China, in the face of economic and geopolitical challenges that require deeper coordination and more flexible cooperation. This is especially true given the unbalanced nature of Trump's personality, from the perspective of the Gulf states, even his closest allies. Many GCC leaders fear a sudden Trump coup against his closest allies, which is one of the reasons for the Gulf's move towards rapprochement with the ASEAN and China, led by Malaysia. The geopolitical transformations and escalating international competition between China and the United States over the Asian region and the Association of Southeast Asian Nations (ASEAN) in East and Southeast Asia, on the part of Russia, Europe, the United States, and China, have highlighted the efforts of the Gulf Cooperation Council (GCC) countries to strengthen their economic and political presence in this vital region through strategic partnerships that transcend traditional considerations and are based on mutual interests and commonalities. ASEAN countries represent emerging economies that hold promising opportunities in multiple fields for China and the Gulf countries, such as energy and infrastructure. This is why all GCC countries are currently investing in it. Furthermore, there are important commonalities, including that these countries, like the Gulf states, are also seeking to distance themselves from geopolitical polarization in their regional environment, especially after the recent Gaza war. The GCC countries are currently unwilling to enter into economic alliances against other parties. This provides common ground for fruitful cooperation between all, led and coordinated by Malaysia as a bridge for communication, dialogue, and coordination between the GCC countries, primarily with China.  There is also a mutual desire to strengthen Sino-Gulf relations with ASEAN countries through Malaysia at various levels, including cultural cooperation, based on a shared history spanning hundreds of years, particularly through the Chinese Belt and Road Initiative, which represents numerous cultural and civilizational aspects, in addition to its economic, commercial, and investment importance for all.  The secret to ASEAN's success and the encouragement of GCC countries to cooperate and coordinate with it and with China through Malaysia is its focus on economic objectives, transcending ideology and non-interference in the internal politics and affairs of other countries, while giving priority to development and investment. The new and vital area of coordination between ASEAN, China, Malaysia, and the GCC countries is the Maritime Cooperation Mechanism, recognizing the importance of oceans and seas as a key factor in driving growth.  Therefore, there is a working agenda for a framework for maritime cooperation among all concerned countries, to ensure the security of maritime and logistical straits, achieve the principles of maritime safety and security, and ensure freedom of navigation and air traffic without obstacles that limit the movement of legitimate maritime trade. It also promotes peaceful resolution of disputes in accordance with the principles of universally recognized international law.   The Gulf's move toward cooperation with ASEAN countries and China, through Malaysia's coordination of the Gulf Cooperation Council (GCC) summit with ASEAN and China, has several fundamental reasons. These include the United States' imposition of tariffs on several countries, including the GCC itself, at varying rates. This will impact their exports to the US market. This move will inevitably push them to seek alternative markets, enhancing opportunities for cooperation between ASEAN and China, led by Malaysia, with the Gulf countries. This comes amid Chinese efforts to leverage these changes to strengthen its negotiating position vis-à-vis the Americans. Perhaps the positive thing is that Washington announced the suspension of these tariffs on China for 90 days, but I most likely expect it to impose other tariffs on China and the Gulf countries and set other conditions. This will make economic relations between the GCC countries, ASEAN, and China vis-à-vis Washington more tense in the short and long term, as their exports to the US will inevitably be affected in the near future. Therefore, we note that these common challenges facing the Gulf Cooperation Council (GCC), ASEAN, China, and Malaysia together in the face of these American pressures, even after Trump's visit to the three Gulf states (Saudi Arabia, Qatar, and the UAE) in the same month as the (ASEAN-China-GCC summit) in Malaysia in May 2025, open the door to new economic dialogues between all parties and help form regional blocs between ASEAN, China, Malaysia, and the GCC countries. There is clear enthusiasm from all parties to make this happen on the ground. Suffice it to mention the keenness of the concerned parties to hold real summits at the level of heads of state, in addition to ongoing ministerial and technical meetings. This reflects the existence of a genuine political will that seeks to translate all these aspirations into practical partnerships on the ground.  In this context, China, ASEAN, and Malaysia welcomed Saudi Arabia's bid to host Expo 2030 in Riyadh, highlighting the importance of organizing regional and international exhibitions to revitalize economic and cultural exchanges between the Gulf and ASEAN regions, including Southeast Asian countries, China, and Malaysia. They also emphasized the importance of conducting consultations to explore cooperation on implementing the “ASEAN Integration Initiative Action Plan” (2021-2025) and integration programs in the Gulf Cooperation Council (GCC) countries with China and Malaysia. This is what the ASEAN-GCC Joint Summit with China and Malaysia seeks to explore and achieve.  The ASEAN-GCC-China Joint Summit, led by Malaysia, is expected to discuss the Joint Action Plan until 2028 and enhance cooperation between the two organizations, particularly political, economic, security, and cultural aspects, as well as investment, tourism, agriculture, halal products, education, and training.  Coordination between these parties, through Malaysia's presidency of the current ASEAN-GCC summit with China, is focused on key economic partnership priorities, namely enhancing regional market integration and integrating them through cooperative partnerships among all, while strengthening the multilateral trading system. This summit also aims to strengthen existing relations between the Gulf states, ASEAN, and China, given the current circumstances, regional conditions, and rapid international changes. The summit will also enhance the dynamics of relations between ASEAN, the GCC, China, and Malaysia, by discussing the path forward and strengthening cooperation across a number of existing areas of cooperation, including combating international crimes and terrorism. It is also an opportunity to identify new areas of cooperation in security, politics, economics, and cultural pillars. The most important aspect, from my perspective, is that the currently emerging multipolar international order requires middle powers such as the Gulf states, ASEAN, China, and Malaysia to stick together and reach a joint dialogue to support multilateral relations, particularly political aspects, and to coordinate their common positions, especially after the recent Gaza war and the American pressures that have become openly exerted on everyone. In general, the relationship between the Gulf and ASEAN sides, along with China and Malaysia, is considered primarily economically important for all, but it has also evolved due to circumstances in the political dimension. ASEAN countries enjoy a reputation for great neutrality and flexibility regarding international positions, with a greater focus on the economic dimension, while Gulf leaders are placing greater importance on developmental aspects alongside the economy.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском The United States and Vietnam, former adversaries but now significant trading partners, are in their second year of the comprehensive strategic partnership, further improving their ties. In 2025, the comprehensive strategic partnership makes a major two-year milestone as both America and Vietnam are thirty years into normalization, as five decades ago, both countries were intertwined in one of the most deadly wars in modern history. The comprehensive strategic partnership is a significant counterbalance in international relations in the Indo-Pacific region against China’s rising soft power and naval force projection into the South China Sea. In its second year, questions remain: Will the partnership hold up, and is there still room to grow between Washington and Hanoi? On September 10th, 2023, then-U.S. President Joe Biden and the late General Secretary Nguyen Phu Trong of Vietnam signed the comprehensive strategic partnership, which is a major turning point in Southeast Asia. The elevation of relations between Hanoi and Washington puts America along the same bilateral status as Russia and China in Vietnam’s hierarchy, signifying a major diplomatic breakthrough between the former two countries. Under the upgraded relations, Vietnam and the United States will further strengthen cooperation in trade, investments, science, technology, and climate action, with more opportunities in other sectors. Southeast Asia is an emerging global supply chain hub for not just the United States but the entire world, and Hanoi is a top ten major trading partner of Washington. The opportunity to grow supply chains in the Indochina region with Vietnam as a starting point would be an essential step toward digressing from the People’s Republic of China, which the United States government looks to do, especially as the latter two superpowers now compete for global hegemonic status. The United States and Vietnam share the ideals of growing their technological and economic sectors. The growth of semiconductors in Eastern Asia continues to grow not only in Taiwan, China, Japan, and South Korea but also in Vietnam. Amkor, an American firm, is opening a $1.6 billion firm in Vietnam for this endeavor. Furthermore, Reuters reported in January 2024 that fifteen American firms are vying to invest $8 billion in semiconductors in Vietnam. American companies and business owners currently heavily invest in Vietnam, such as Intel, Apple, Nike, Amkor, Marvell, and First Solar, and the list can continue to grow in the comprehensive strategic partnership. Simultaneously, Vietnamese companies such as VinFast and VGN Corporation are increasing investments in the United States. VinFast’s growth in North Carolina is helping the local economy by creating more manufacturing opportunities. Though Vietnam and the United States have reached new peaks in upgraded relations, it is vital to mention that the comprehensive strategic partnership is not a mutual defense accord including direct military assistance. During the joint signing, neither Washington nor Hanoi mentioned ‘containment’ of Beijing’s ambitions, even though the South China Sea continues to grow into a potential regional powder keg. Vietnam’s upgraded partnership with the United States correlates with India’s current strategy of not fully aligning to one side to trigger ire or retaliation from the People’s Republic of China but strategically keeping full diplomatic cohesion with all regional powers while maintaining its sovereignty. Vietnam is also a close ally of Russia as the United States ignored the original requests for their self-determination post-WWII. Though they do not supply the Russian military’s illegal aggression in Ukraine, it is tantamount for the U.S. government not to push or strong-arm Hanoi closer to Moscow. Nevertheless, in the future, the U.S. and Vietnamese Armed Forces could establish backchannels to warn each other of any potential military threat by the People’s Liberation naval movements around the South China Sea without openly engaging in military cooperation that could draw strong actions from China and Russia. Hanoi looks to advance its interests amidst rising economic and technological competition in the Indo-Pacific and growing American investments will only push Vietnam’s marketing further. Simultaneously, Washington gains a growing economic and diplomatic presence in Southeast Asia. To promote a growing relationship, the United States can also further reconciliation efforts in the aftermath of the Vietnam War, as many of Vietnam’s demographic majority and elderly still remember the American aggression in the Indochina conflicts. In its second year, Hanoi and Washington continue to grow ties through several key sectors that advance both country’s national interests and further open opportunities between the East and West. Rebuilding and rewriting the wrongs of the past, the United States reached out to Vietnam to solidify a comprehensive strategic partnership, which is decades in the making and a landmark agreement long envisioned by Ho Chi Minh. With opportunities to expand into the technology, economic, and trade sectors, Hanoi and Washington continue to grow bilateral ties in year two of the partnership. The text of this work is licensed under  a Creative Commons CC BY-NC 4.0 license

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Last week, the Trump administration signed a deal with Ukraine that gives it privileged access to Ukraine’s natural resources. Some news outlets described the deal as Ukrainian President Volodymyr Zelensky “caving” to US President Donald Trump’s demands. But we see the agreement as the result of clever bargaining on the part of Ukraine’s war-time president. So, what does the deal mean for Ukraine? And will this help strengthen America’s mineral supply chains? Ukraine’s natural resource wealth Ukraine is home to 5% of the world’s critical mineral wealth, including 22 of the 34 minerals identified by the European Union as vital for defence, construction and high-tech manufacturing. However, there’s a big difference between resources (what’s in the ground) and reserves (what can be commercially exploited). Ukraine’s proven mineral reserves are limited. Further, Ukraine has an estimated mineral wealth of around US$14.8 trillion (A$23 trillion), but more than half of this is in territories currently occupied by Russia. What does the new deal mean for Ukraine? American support for overseas conflict is usually about securing US economic interests — often in the form of resource exploitation. From the Middle East to Asia, US interventions abroad have enabled access for American firms to other countries’ oil, gas and minerals. But the first iteration of the Ukraine mineral deal, which Zelensky rejected in February, had been an especially brazen resource grab by Trump’s government. It required Ukraine to cede sovereignty over its land and resources to one country (the US), in order to defend itself from attacks by another (Russia). These terms were highly exploitative of a country fighting against a years-long military occupation. In addition, they violated Ukraine’s constitution, which puts the ownership of Ukraine’s natural resources in the hands of the Ukrainian people. Were Zelensky to accept this, he would have faced a tremendous backlash from the public. In comparison, the new deal sounds like a strategic and (potentially) commercial win for Ukraine. First, this agreement is more just, and it’s aligned with Ukraine’s short- and medium-term interests. Zelenksy describes it as an “equal partnership” that will modernise Ukraine. Under the terms, Ukraine will set up a United States–Ukraine Reconstruction Investment Fund for foreign investments into the country’s economy, which will be jointly governed by both countries. Ukraine will contribute 50% of the income from royalties and licenses to develop critical minerals, oil and gas reserves, while the US can make its contributions in-kind, such as through military assistance or technology transfers. Ukraine maintains ownership over its natural resources and state enterprises. And the licensing agreements will not require substantial changes to the country’s laws, or disrupt its future integration with Europe. Importantly, there is no mention of retroactive debts for the US military assistance already received by Ukraine. This would have created a dangerous precedent, allowing other nations to seek to claim similar debts from Ukraine. Finally, the deal also signals the Trump administration’s commitment to “a free, sovereign and prosperous Ukraine” – albeit, still without any security guarantees. Profits may be a long time coming Unsurprisingly, the Trump administration and conservative media in the US are framing the deal as a win. For too long, Trump argues, Ukraine has enjoyed US taxpayer-funded military assistance, and such assistance now has a price tag. The administration has described the deal to Americans as a profit-making endeavour that can recoup monies spent defending Ukrainian interests. But in reality, profits are a long way off. The terms of the agreement clearly state the fund’s investment will be directed at new resource projects. Existing operations and state-owned projects will fall outside the terms of the agreement. Mining projects typically work within long time frames. The move from exploration to production is a slow, high-risk and enormously expensive process. It can often take over a decade. Add to this complexity the fact that some experts are sceptical Ukraine even has enormously valuable reserves. And to bring any promising deposits to market will require major investments. What’s perhaps more important It’s possible, however, that profits are a secondary calculation for the US. Boxing out China is likely to be as – if not more – important. Like other Western nations, the US is desperate to diversify its critical mineral supply chains. China controls not just a large proportion of the world’s known rare earths deposits, it also has a monopoly on the processing of most critical minerals used in green energy and defence technologies. The US fears China will weaponise its market dominance against strategic rivals. This is why Western governments increasingly make mineral supply chain resilience central to their foreign policy and defence strategies. Given Beijing’s closeness to Moscow and their deepening cooperation on natural resources, the US-Ukraine deal may prevent Russia — and, by extension, China — from accessing Ukrainian minerals. The terms of the agreement are explicit: “states and persons who have acted adversely towards Ukraine must not benefit from its reconstruction”. Finally, the performance of “the deal” matters just as much to Trump. Getting Zelensky to sign on the dotted line is progress in itself, plays well to Trump’s base at home, and puts pressure on Russian President Vladimir Putin to come to the table. So, the deal is a win for Zelensky because it gives the US a stake in an independent Ukraine. But even if Ukraine’s critical mineral reserves turn out to be less valuable than expected, it may not matter to Trump.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском The agreement was an acknowledgment of the significance of their trade for mutual economic development and the health of the global economy, the joint statement says. China and the US agreed to roll back high tariffs imposed on one another last month for a period of 90 days. The agreement was announced in a joint statement issued on Monday, May 12. The agreement was a result of a high-level meeting on trade and economic affairs held between Chinese and US delegations in Geneva, Switzerland over the weekend. As described in a press conference on Monday by the US Treasury Secretary Scott Bessent who was part of the US delegation, both sides have agreed to reduce the tariffs by 115%. That would mean that the US will reduce its tariffs on China to 30% from its present 145% while the Chinese will lower their tariffs to 10% from its present 125%. These new tariff rates would be effective from Wednesday for the next 90 days. Both the countries also agreed to explore a more stable arrangement in the interim period. China also agreed to reverse additional measures imposed in response to US President Donald Trump’s tariff war, such as putting various US companies on the sanctions list and placing export controls on rare earth minerals. The parties committed to taking these measures as an acknowledgment of the mutual significance of their bilateral trade and its importance for the global economy and for “moving forward in the spirit of mutual opening, continued communication, cooperation and mutual respect,” a joint statement says. The 30% US tariff includes a 10% baseline tariff imposed on all imports by Trump in April after suspending his reciprocal tariff regime for 90 days, and a 20% tariff imposed by the Trump administration before April in the name of stopping the illegal flow of the drug fentanyl. Answering a question on the cooperation between both the countries over fentanyl, the spokesperson of the Chinese Foreign Ministry Lin Jian criticized “the wrongly slapped tariffs on Chinese imports” by citing the issue and claiming that “if the US truly wants to cooperate with China, it should stop vilifying and shifting the blame.” Jian also advised the US “to seek dialogue with China based on equality, respect and mutual benefit.” Relief for the global economy  Trump announced a reciprocal tariff regime on April 2 against all those countries which had a trade surplus with the US, including China. After global backlash, Trump later postponed the implementation of the regime for 90 days, inviting countries to seek bilateral agreements to avoid high tariffs while imposing a 10% common tariff. The Trump administration had claimed that reciprocal tariffs were required in order to lower the US trade deficit, which is over a trillion dollars. China, the third largest trade partner of the US, faced the highest tariff rates under Trump’s tariff war and chose to retaliate. It also called the policy a violation of international law and an attempt by the US to weaponize trade. On Tuesday, Chinese President Xi Jinping reiterated his country’s position that there are no winners in trade and tariff wars, claiming bullying and hegemony will only result in self-isolation. He was addressing the fourth ministerial meeting of the China-CELAC (Community of Latin American and Caribbean States) forum in Beijing. The tariff war between the world’s leading economies was seen as a disaster for the global economy and trade. A large number of US businesses had also opposed Trump’s tariff war. They had claimed high tariffs may lead to a rise in prices which harm both the consumer and domestic production. Several businesses filed lawsuits in the US claiming Trump’s reciprocal tariff regime was illegal and harmful for their ability to do business. US trade representative Jamieson Greer, who was part of the negotiating team in Geneva, claimed that the talks with various countries, including China, is the first step to reducing the US trade deficit and ending the national emergency declared by Trump to authorize the reciprocal tariff decrees, South China Morning Post reported. The Chinese Ministry of Commerce also hailed the agreement as “substantive progress” for mutual economic development. It expressed hope that “the US side will build on the meeting, continue to work with China in the same direction, completely rectify its wrong practices of unilateral tariff hikes, and keep strengthening mutually beneficial cooperation.” Acknowledging that “high levels of tariffs were equivalent to an embargo and neither side wanted that,” Bessent declared on Monday that the US wants a trade relationship with China, though a balanced one. The Chinese Ministry of Commerce also hoped that the US would pursue the matter much more seriously and “inject more certainty and stability into the world economy.” Both the countries have agreed to establish “a joint mechanism” to continue their trade and economic negotiations in future. Text under Creative Commons Attribution-ShareAlike 4.0 (CC BY-SA) license

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском By assuming that trade relations are a zero-sum game in which one party must lose for the other to win, and that a trade deficit represents a loss while a surplus represents a win, President Trump reveals a simplistic view far removed from the dynamics of international trade. Let’s imagine that the global economy is Central America, that Costa Rica imports more goods than it exports, and that other countries accept paper printed by its Central Bank — bills in colones — as payment for their exports. Furthermore, let’s assume that a good portion of their trade surpluses are used to buy Costa Rican government bonds and make deposits in its banks, accepting — due to confidence in the strength of its economy — lower interest rates than they might obtain in other markets, and that those debts can be paid with the same printed paper. Trade deficits arise because a significant share of Costa Rican consumers and investors prefer to source final, intermediate, and capital goods from other Central American countries where prices are lower than at home. In other words, those deficits are the result of a national choice to enjoy a higher quality of life and greater productivity than what its economy would otherwise allow. Under these circumstances, Costa Rica, far from being a victim of other countries’ policies, would actually be enjoying levels of consumption above its means and economic growth beyond what its productivity would justify. The willingness of those countries to hold the colones derived from their trade surpluses in Costa Rican government bonds and bank deposits results in lower interest rates in Costa Rica. This enables a higher sustainable level of public debt, greater investment at low cost to improve infrastructure and service quality, and lower interest rates for private investment — all of which contribute to a higher rate of economic growth without endangering macroeconomic stability. In such a scenario, making imports more expensive through tariffs to boost local production competitiveness and eliminate trade deficits would, one by one, remove these advantages — amounting to nothing more than an own goal. This remains true even if Central American countries did not retaliate by restoring relative competitiveness to its starting point, and even if Costa Rican investors were not left uncertain about whether a future government might remove the tariffs. The U.S. economy faces the world in a situation identical to that hypothetical scenario of Costa Rica. It takes advantage of the fact that with paper printed by its central bank — the dollar — can pay for the real production of other countries, allowing it to live far beyond its means. Far from being “cheated” by other nations, as Trump claims, the United States enjoys a standard of living well above its capacity precisely because of this. That does not mean the U.S. is cheating anyone, since it is thanks to its economic strength that the rest of the world accepts that paper as a means of payment and trusts in its government bonds and banking system. Thus, by assuming that trade relations are a “zero-sum game” — where one must lose for the other to win — and that a trade deficit signals losing while a surplus signals winning, President Trump ignores these realities. He reveals a board-game level of simplification, detached from the complex chessboard that defines international trade dynamics. It is nothing less than a massive own goal. Trade deficits are an economic problem for countries like Costa Rica, which must pay for their imports using foreign currency, often requiring them to take on debt and/or attract foreign investment through subsidies and tax exemptions. This combination of factors permanently threatens macroeconomic stability and forces governments to limit spending on infrastructure and social services to free up resources to cover interest payments and the growing fiscal costs of structuring an economy based on incentives to foreign companies. Adding to the absurdity of Trump’s proposals, his goal is to achieve trade surpluses with every country in the world. However, the United States does not produce coffee or cocoa; thus, with some of the countries that export these products, running trade deficits is not only inevitable but also beneficial for the U.S. Many countries in the region, even without the advantages the United States enjoys, are unlikely to avoid trade deficits — for example, with oil-producing countries or those manufacturing goods that incorporate cutting-edge technologies. In such cases, raising tariffs could severely damage their economies. Trump boasts that the countries affected by the tariffs are lining up to renegotiate, claiming that this was his goal. If so, it marks the beginning of an uncertain period, contaminated by threats and blackmail, with China standing by to benefit from the resentment against the United States. This scenario will severely affect private sector investment plans, employment, and economic growth — not only in the United States but around the world. Far from "Making America Great Again" (MAGA), Trump is diminishing both his country and the world while violating every rule of international trade, both global ones under the WTO framework and those contained in free trade agreements like CAFTA-DR. This, of course, validates the concerns of those of us who argued that such treaties did not guarantee protected access to the U.S. market against political or geopolitical shifts. In international relations, the historical rule has been that decisions are not based on any moral or legal absolutes but rather on the exercise of power from unequal positions ("might is right"). This is why we always doubted that a free trade agreement with weaker countries would truly guide the behavior of the United States. But Trump's overwhelming violations of international law (surprisingly and disappointingly supported by more than half of his country’s political establishment) strip the United States of any moral authority to criticize countries that do not act according to the rules. This imposing attitude, reaffirmed by Trump when he paraphrases emperors and tyrants — enemies of any democratic principle — who claimed that "those who save their country violate no law," leads us to a world where anything is permitted for those who hold power. From the perspective of the definition of civilization, a world where anything goes loses its value. It takes us back to the law of the jungle — the rule of the strongest, of violence and war, or of peace imposed by one over others, not through harmony and goodwill. This is not a new “Washington Consensus”, now guided by the mercantilism typical of the 18th and 19th centuries, because in this case neither multilateral organizations like the World Bank or the International Monetary Fund nor other Western powers share Trump’s decisions. Far from consensus, today the most frequently heard word in those circles is “retaliation”. Latin America will be affected by the potential decline in global GDP growth, the tariffs imposed on our exports, and the rise in interest rates resulting from inflation that could be triggered by higher import taxes in the United States. However, the region could benefit from the U.S. confrontation with its developed-world allies by strengthening economic ties with Europe, China, Japan, India, and other powers of the Global South — without, of course, abandoning the U.S. market. To achieve this, our governments must stop meekly following Trump’s directives, such as preventing Huawei from competing to sell us 5G technology, participating in a shameful deportation policy that violates fundamental human rights, or undermining Panama’s absolute sovereignty over the Canal. What is needed is to build and implement a foreign policy with dignity, one that best serves the interests of each of our countries — not the whims of a single power.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском In December 2024, Cambodia reached a key point in its foreign policy. Japan delivered a group of patrol boats to Cambodia as part of the "Free and Open Indo-Pacific" (FOIP) regional initiative. This clearly showed that security cooperation between the two countries is growing stronger. In April 2025, Japan is expected to take another big step by becoming the first foreign country allowed access to Cambodia’s strategically important Ream Naval Base — a facility that has been upgraded by China since 2022.These events, happening just months apart, seem to show Cambodia’s effort to expand its foreign partnerships after relying on China for a long time. The handover of Japanese vessels, while China is leading the base's modernization, is more than just a friendly act from Tokyo. It is a smart move by Cambodia, showing how it is trying to use the rivalry between big powers to strengthen its own security and independence. But can Cambodia really protect its sovereignty by trying to balance the interests of powerful countries? Or is this idea of multiple partnerships just an illusion — hiding the fact that Chinese influence continues to grow? The answers to these questions may shape the future of regional security in Indochina. In August 2023, Hun Manet became Cambodia’s new Prime Minister, replacing his father Hun Sen, who had ruled for nearly 40 years. Unlike his father, Hun Manet has a Western education — he graduated from the U.S. Military Academy at West Point and earned a PhD in economics from the University of Bristol. His background gave some hope to Western diplomats that Cambodia’s foreign policy might move in a direction closer to their values. These hopes were partially fulfilled when Hun Manet’s first major foreign policy statement reaffirmed Cambodia’s commitment to diversifying its international relationships while strictly adhering to the principle of neutrality. This stance was particularly significant, given Cambodia’s longstanding perception among Western analysts as a pro-China state. For years, the Khmer elites have consistently voiced support for the PRC on the international stage, receiving in return substantial investment and infrastructure aid. However, these actions have occasionally strained Cambodia’s ties with neighboring countries — a dynamic noted by officials within the Association of Southeast Asian Nations (ASEAN), of which Cambodia has been a member since 1999. A striking example is the discord surrounding the South China Sea territorial disputes. When affected countries sought to use ASEAN as a platform to pressure Beijing, Cambodia opposed the effort, effectively blocking the adoption of a joint statement in autumn 2024 — something unprecedented in ASEAN’s 45-year history. With a few exceptions, the Khmer elites traditionally supported a policy of non-alignment during the Cold War and, afterward, a neutral stance on foreign affairs. Former Prime Minister Hun Sen himself emphasized that Cambodia seeks ties not only with China, but with all countries, considering this the most beneficial foreign policy path for a developing nation. Among Phnom Penh’s close partners is Japan, which conducts an active foreign policy in the region and stands as one of the Kingdom’s largest economic donors. At the same time, it is important to note that Hun Sen described relations with China as "unbreakable" and consistently rejected external criticism, highlighting only the positive aspects of Cambodia’s deepening ties with Beijing. In the first half of December 2024, Cambodia and Japan signed an agreement on the transfer of military patrol boats to Phnom Penh as part of Japan’s FOIP (Free and Open Indo-Pacific) initiative. Cambodia became the first ASEAN country to receive such assistance. However, the Kingdom has no intention of turning its back on China. The principle of neutrality, which underpins the country’s foreign policy, means that partnership with Japan does not contradict friendship with the PRC. Rather, the combination of the two reflects a strategy of multi-vector diplomacy, enabling Cambodia to benefit from relationships with a variety of partners. This approach is supported by several factors. First, Prime Minister Hun Manet has repeatedly affirmed his commitment to an "independent and neutral foreign policy based on the rule of law, mutual respect, and adherence to the principles of the UN Charter." In his words, this policy aims "to promote national interests, strengthen existing friendships, and build more solid ties." Second, Phnom Penh consistently accepts aid from all willing donors, including Australia through the Cambodia-Australia Partnership for Resilient Economic Development (CAPRED), the United States, Japan, and, of course, China. In 2023, marking the 70th anniversary of diplomatic relations with Japan, Cambodia elevated bilateral cooperation to the level of a Comprehensive Strategic Partnership. With this move, Japan joined a narrow circle of Phnom Penh’s strategic allies — a status previously held solely by China between 2010 and 2023 — advancing from basic diplomatic engagement and standard strategic partnership. Although China surpassed Japan in aid volume back in 2007, Tokyo remains a vital partner for Phnom Penh. Between 1994 and 2021, Japan implemented 210 investment projects in Cambodia totaling $3.1 billion. In 2024, bilateral trade between Japan and Cambodia reached $40.94 billion, placing Tokyo as the Kingdom’s fifth-largest trading partner. This robust economic cooperation underscores Japan’s strategic importance to Cambodia and highlights Phnom Penh’s efforts to diversify its international relationships, avoiding overreliance on any single partner. Despite Japan’s recent delivery of patrol boats to Cambodia, Phnom Penh’s most robust military cooperation remains with China. Between 2016 and 2024, China and Cambodia conducted six joint military exercises under the name “Golden Dragon” (នាគមាស), with each iteration featuring an increase in the number of troops, weaponry, and military equipment involved. Even amid the global threat of the COVID-19 pandemic in 2020, Phnom Penh proceeded with the fourth iteration of these drills, involving nearly 3,000 soldiers — ten times more than in 2016. [1]. The drills also included dozens of combat helicopters, armored vehicles, and various transport assets. This continuous military support from Beijing underscores Cambodia’s growing reliance on Chinese involvement in strengthening its armed forces. Meanwhile, after seven years of joint military exercises with the United States, Cambodia suspended this cooperation in 2017, officially citing scheduling conflicts due to national elections. However, in June 2024, during a meeting between Hun Sen and U.S. Secretary of Defense Lloyd Austin, Cambodia announced the resumption of military cooperation with Washington. Furthermore, the U.S. agreed to revive joint military drills and to once again accept Cambodian cadets for training at the U.S. Military Academy at West Point. For the United States, the primary point of contention has been the Chinese-built Ream Naval Base in Cambodia, despite Phnom Penh’s repeated assurances that the facility is intended solely for use by the Royal Cambodian Navy. Rumors about the base’s development first surfaced in 2018, sparking increased tensions between Phnom Penh and Washington. At the time, however, the U.S. lacked concrete evidence to formally accuse Cambodia of intending to host Chinese military forces on its territory, and American officials limited their response to diplomatic messages expressing concern. In August 2018, then-Secretary of State Mike Pompeo stated that he trusted Cambodia’s assurances that the base would be used exclusively by its own navy, and he praised the Kingdom for its “firm defense of national sovereignty.” In early December 2024, a U.S. Navy vessel arrived in Cambodia in the first port call in eight years — a visit made possible after a prolonged period of strained relations due to sustained American criticism of Cambodia’s human rights record. Cambodia’s Ministry of National Defense stated that the visit was arranged following a request from the United States and would help to “strengthen and expand the bonds of friendship, as well as enhance bilateral cooperation” between the two countries. *** In recent years, the Asia-Pacific region has become a stage for intensifying geopolitical competition, directly impacting Cambodia’s security environment and foreign policy choices. The strategic interests of major powers such as the United States and China increasingly intersect in the region, prompting smaller states — including Cambodia — to explore new pathways for safeguarding their independence and national security. In response to these shifts, Phnom Penh has sought to strengthen its defense capabilities and diversify international partnerships, as reflected in the agreement with Japan on the transfer of military vessels. This move not only enhances bilateral relations with Tokyo but also signals Cambodia’s intent to play a more active role in regional security affairs. Such involvement could enable Cambodia to navigate between competing global powers and maintain its independence amid mounting pressure from both China and the United States.Russia, as one of Cambodia’s traditional partners, may also seek to bolster its regional presence by intensifying diplomatic engagement and offering avenues for cooperation in defense, security, and military technology. This would help Phnom Penh better balance its external relations and maneuver between great powers more effectively. For Moscow, it presents an opportunity not only to deepen ties with Cambodia, but also to expand its influence in Southeast Asia and counter the growing presence of Western actors in the region. 1. Phan Thi Hai Yen. (2024). Cambodia's Strategic Embrace of China: Military Cooperation and Its Implications. ISRG Journal of Arts Humanities & Social Sciences (ISRGJAHSS), II(V), 191–198.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском I. Introduction U.S. trade with China has significantly grown in recent decades and is crucial for both countries. Today, China is one of the largest export markets for U.S. goods and services (second to Mexico), and the United States is the top export market for China. As Figure 1 shows, this trade—much of which increased after China joined the World Trade Organization (WTO) in 2001—has brought lower prices to U.S. consumers and higher profits for American companies. But it also comes with costs, notably the loss of American jobs because of import competition, automation, and multinational companies moving manufacturing overseas.   Figure 1: US-China Trade over the 20 years Source: U.S. Bureau of Economic Analysis. After President Donald Trump began a so-called trade war with China in 2018, economic tensions between China and the U.S. have been on the rise. Chinese officials have warned that there are “no winners” in a trade war, but the second Trump administration embarked on a new and more aggressive tariff policy. In the first months of his second administration, Trump has threatened tariffs as high as 145 percent on all Chinese goods, while China’s latest retaliatory tariffs on U.S. imports are as high as 125 percent. The Trump administration claims the levies attempt to punish China for unfair trade practices, including Chinese subsidies that hurt U.S. workers and the long-standing accusation that China pressures American companies to hand over their technology and intellectual property, as well as China’s role in illicit fentanyl trafficking. Some economists doubt, however, that Trump’s aggressive approach will achieve its desired goals and raise concerns that tariffs will drive up inflation and the costs of goods, hurting American consumers and exports. This paper attempts to examine the economic effects of the U.S.-China trade war. It first shows the economic effects of the U.S.-China trade war under the first Trump administration and then forecasts for the second Trump administration. II. Trade War between the U.S. and China As Figure 2 shows, the US trade deficit with China has increased as trade between both countries expanded. Therefore, the first Trump administration started the trade war by imposing higher tariffs on Chinese goods. Figure 2: US-China Goods Trade (2001-2024) Figures 3-1, 3-2, and 4 show U.S. and Chinese tariff rates for each other’s goods. As Figure 3-1 shows, the US tariffs on Chinese goods were less than 5 per cent when the first Trump administration began on January 20, 2018. Then the tariff continued to rise. As Figure 3-2 shows, the average US tariffs on China goods were 20.8 percent when the second Trump administration began on January 20, 2025. As Figure 4 shows, after the second Trump administration took office, US tariffs of 10 percent were imposed on all imports from China under the International Emergency Economic Powers Act (IEEPA) on February 1, 2025. Then the Trump administration increased tariffs on Chinese goods to 20 percent on March 3 and to 34 percent on April 2. US tariffs of 10 percent were imposed on nearly all countries under IEEPA, but with some sector carve-outs on April 5. China retaliated against US tariffs by increasing tariffs on U.S. products to 34 percent on April 4 and to 84 percent on April 10. US tariffs ranging from 1 percent to 74 percent were imposed on nearly all countries with a trade surplus with the US, including China (74 percent). US tariff on Chinese goods included an additional 50 percent tariff as counter-retaliation for China’s retaliation announcement on April 10. Then again China faced an additional 41 percent tariff increase under IEEPA (to 125 percent total). However, Trump instituted a broad 90-day pause on steep Liberation Day tariffs, aiming to give time for negotiators to work out new deals. But Trump has not provided a pause for China. In response, China has raised its duties on imports of US goods to 125 percent from 84 percent on April 12, while US tariffs on Chinese imports have increased to 145 percent by adding a 20 percent tariff in relation to the fentanyl. Figure 3-1: US–China tariff rates toward each other and the rest of the world (ROW) before 2025 Source: MacroMicro. https://en.macromicro.me/charts/130548/china-us-tariff-rates  Figure 3-2: US–China tariff rates toward each other and rest of world, 2018-2025  Figure 4: US–China tariff rates toward each other in 2025 Source: Reuters, April 11, 2025. III. Economic Effects of the Trade War between the U.S. and China A.  The first Trump administration Chad Bowen (2023) at the Peterson Institute for International Economics raised a question “was the trade war between U.S. and China worth it for US exporters”? And his answer so far is no. In the middle of the trade war, the United States and China signed a historic trade agreement on a ‘Phase One trade deal’ on January 15, 2020. Bowen supposes that in 2018–21, US goods exports to China of phase one products had grown at the same pace as China’s imports of those products from the world and that US services exports to China had grown at the rate of US services exports to the world. Cumulative US goods and services exports to China in 2018–21 were about 19 percent lower with the trade war and phase one agreement between the two countries (see Figure 5). His estimates suggest that the United States would have avoided export losses of $24 billion (16 percent) in 2018 and $30 billion (20 percent) in 2019 resulting from the trade war. Exports would also have been $27 billion (18 percent) higher in 2020 and $40 billion (23 percent) higher in 2021 than under phase one agreement.   Figure 5: US exports to China would be higher with no trade war. i. US manufacturing exports suffered in the trade war and did not recover. As Figure 6 shows, China purchased only 59 percent of the full commitment of US manufactured products in 2020–21 under Phase One trade deal. Manufacturing was the most economically significant part of the trade deal, making up 44 percent of covered US exports in 2017. Autos and aircraft dominated US exports before the trade war. Both did poorly during the period of 2020–2021. US auto exports reached only 39 percent of the target over 2020–21. The sector’s suffering is a trade war warning. In July 2018, Trump’s tariffs on Chinese imports included auto parts; China’s tariff retaliation hit US car exports. US car exports decreased sharply in 2018, as car makers like Tesla and BMW reacted to the higher costs by moving production destined for the Chinese market out of the United States. (Ford, another major car exporter, including through its Lincoln brand, complained in 2018 that Trump’s separate steel and aluminum tariffs raised the cost of its US-based manufacturing by $1 billion.) Even when China lifted the retaliatory tariffs in early 2019, US exports did not recover. Sales of US aircraft, engines, and parts to China did even worse, reaching just 18 percent of the 2020–21 target. Though the industry was less directly impacted by trade war tariffs, US sales to China plummeted in 2019 after the two crashes of the Boeing 737 MAX. Between March 2019 and late 2020, the airplane model was grounded, with Boeing shutting down production in early 2020. China cancelled orders in April 2020, and though the legal text allows credit for aircraft “orders and deliveries”, additional orders had not been publicly announced by the end of 2021, despite complaints by the Biden administration that China's trade policy was holding back sales. (Exports of the 737 MAX might eventually resume, as Chinese regulators instructed airlines in December 2021 to implement the changes needed to allow the model to fly again in China.) Not all manufactured exports performed poorly during the period of 2020–21. Medical supplies needed to treat Covid-19 significantly increased. US exports of semiconductors and manufacturing equipment also boomed – thanks to a combination of stockpiling by Chinese companies as US export controls in 2019-20 threatened to cut off Chinese firms like SMIC and Huawei as well as increased demand for chips needed for consumer electronics and data servers brought on by the Covid-19 pandemic shift to remote work, schooling, and leisure.  Figure 6: US-China war battered hard US manufacturing exports to China ii.  US agricultural exports suffered in the trade war, received subsidies, and then recovered. To the Trump administration, agriculture was a very politically important part of the trade deal in 2020, despite accounting for only 14 percent of covered exports. As Figure 7-1 shows, when China's retaliatory tariffs hurt US farm exports during the period of 2018–19, the Trump administration awarded the sector tens of billions of dollars in federal subsidies. In the days leading up to the 2020 presidential election, the Trump administration released a report that touted resuming farm sales to China—ignoring the continued troubles facing US manufacturing, energy, and service exports. US farm exports did get back to 2017 pre-trade war levels and ultimately reached 83 percent of the 2020–21 commitment under Phase One deal (see Figure 7-1 & 7-2).  Figure 7-1: US agricultural exports to China Soybeans made up approximately 60 percent of US agricultural exports to China in 2017. As Figure 7-2 shows, exports of US soybeans to China were devastated by the trade war, falling from $12 billion to $3 billion in 2018, because China imposed retaliatory tariffs. Though soybean exports managed to reach their pre-trade war levels during the period of 2020–21, they still fell over 30 percent short of their target under Phase One deal. Products like pork, corn, wheat, and sorghum exceeded expectations, though not necessarily because of the trade deal in January 2020. The outbreak of African swine fever led China to increase pork imports from the U.S. in 2019 before the deal was agreed. (In 2020–21, China's pigmeat imports from the rest of the world also averaged five times 2017 levels.) Wheat and corn imports increased after China began to comply with a 2019 WTO dispute settlement ruling against its unfilled tariff rate quotas. (Compared with 2017, China's imports from the rest of the world in 2020–21 were about 200 percent higher for wheat and 350 percent higher for corn.) Some farm exports also benefitted less from the Chinese purchase commitments under the trade deal in January 2020. Seafood and farm products did not rebound from the effects of the trade war. After being hit with Chinese tariffs, US lobster exports re-achieved about half of their target in 2020–21. US exports of raw hides and skins ended up at less than one-third (see Figure 7-2).  Figure 7-2: US agricultural exports to China (sub-category) iii. U.S. Imports from China: Total US imports from China were down with the beginning of the trade war. For 15 months beginning in July 2018, the Trump administration imposed higher tariffs on Chinese products. The Trump administration began the trade war by imposing tariffs of 25 percent on products covering roughly $34 billion of US imports from China in July 2018 (List 1) and on $16 billion of imports in August (List 2). When China retaliated against the U.S., the trade war continued with Trump imposing 10 percent tariffs on an additional $200 billion of imports in September 2018 (List 3), increasing the tariff rate of those duties to 25 percent in June 2019. In September 2019, Trump hit another $102 billion of imports (List 4A) with 15 percent tariffs, later reducing them to 7.5 percent upon implementation of the US-China Phase One trade agreement in February 2020. (The administration identified another set of products covering most of the rest of US imports from China of more than $160 billion—List 4B—for which it scheduled tariffs to take effect on December 15, 2019 but was cancelled on December 13, 2019.) As a result, as Figure 8-1 & 8-2 show, overall, the trade war reduced US imports from China. Then US imports recovered only slowly, starting in mid-2020. In January 2022, when the term of the first Trump administration ended, US imports from China (red line) remained well below the pre-trade war trend (dashed line), while US imports from the rest of the world (blue line) returned to pre-trade war levels of June 2018. China was the source of only 18 percent of total US goods imports in 2022, down from 22 percent at the beginning of the trade war.  Figure 8-1: Value of US goods imports from China and the rest of the world, 2016–2022 (June 2018 = 100)  Figure 8-2: Value of US imports from China and the rest of the world by trade war tariff list, 2018–2022 (June 2018 = 100) B.  The second Trump administration As of April 12, 2025, U.S. tariffs on Chinese goods are 145 percent, but this tariff rate is not sustainable over a long period of time because it is way too high and because U.S. President Donald Trump and Chinese leader Xi Jinping want to negotiate. In fact, Trump signalled on April 23 that he would cut his 145 percent tariff on Chinese goods substantially. Therefore, it is not reasonable to explore the effects of Trump’s tariffs of 145 percent. Last year, McKibbin, Hogan, and Noland at the Peterson Institute for International Economics (PIIE) examined the impact of now-President Trump’s proposed tariffs based on Trump’s campaign promises that would impose 60 percent additional tariffs on imports from China. They explored the impacts of a 60 percent additional tariff on China with and without other countries’ retaliating in kind by imposing steeper tariffs on imports from the United States. Figures 9 through 14 show the results from their analyses. Figure 9 shows that China experiences the most significant GDP losses (0.9% below baseline by 2026), while the U.S. also experiences a negative GDP growth rate (0.2% below baseline by 2027).  Figure 9: Projected change in real GDP of selected economies from an additional 60 percent increase in US tariffs on imports of goods from China, 2025-40 Figure 10 shows that the direct impact of the U.S. tariff of 60 percent on Chinese employment is initially negative (-2.25% in 2025), but a gradual decline in Chinese real wages eventually restores employment to the baseline after a decade. US employment will fall 0.23% below baseline by 2027.  Figure 10: Projected change in employment (hours worked) in selected economies from an additional 60 percent increase in US tariffs on imports of goods from China, 2025-40 Figure 11 shows that US inflation rises by 0.4% in 2025, with the higher cost of imports due to tariffs not offset by the stronger US dollar lowering prices of imports from other countries. The tariffs on US imports from China are mildly deflationary in other countries (see Figure 11).  Figure 11: Projected change in inflation in selected economies from an additional 60 percent increase in US tariffs on imports of goods from China, 2025-40 The slowdown in the Chinese economy causes capital to flow out of China and into other economies. This is initially a financial capital flow responding to a fall in financial rates of return in China and a rise in expected profits in countries like Canada and Mexico. That financial inflow becomes physical investment over time, which increases production capacity in these economies. Countries that receive the capital experience a trade deficit (see figure 12). This additional production enables the rise in exports to the US economy. While the US trade deficit with China shrinks, the overall US trade deficit increases (figure 12) as the partial relocation of production back into the US economy causes the dollar to appreciate.  Figure 12: Projected change in the trade balance of selected economies from an additional 60 percent increase in US tariffs on imports of goods from China, 2025-40 So far, figures have focused on the unilateral imposition of US tariffs on Chinese products. In figure 13, McKibbin, Hogan, and Noland compare projected changes in US GDP from the unilateral imposition of tariffs with a scenario where China retaliates by imposing a 60% tariff on US goods and services. By 2026, US GDP losses from Trump’s tariff policy more than double if China retaliates against the US (see Figure 13). The impact on US inflation in 2025 yields a similar result (see Figure 14). With Chinese retaliation, US inflation rises 0.7% above baseline compared with 0.4% without retaliation.  Figure 13: Projected change in US GDP from an additional 60 percent increase in US tariffs on imports of goods from China, with and without retaliation by China, 2025-40  Figure 14: Projected change in US inflation from an additional 60 percent increase in US tariffs on imports of goods from China, with and without retaliation by China, 2025-40 IV. Conclusion This paper showed that U.S. tariffs on Chinese goods imposed by the first Trump administration mainly had negative impacts on U.S. exports, although they reduced U.S. imports from China over a short period of time. The analysis by McKibbin, Hogan, Noland (2024) for the second Trump administration also shows that U.S. tariffs on Chinese goods will have negative impacts on US GDP, inflation, employment, and trade balance. This paper also showed that U.S. tariffs on Chinese goods will have larger negative impacts on U.S. GDP and inflation if China retaliates. Then a question arises: “Why does Trump attempt to impose extremely high tariffs on products from China?” Larisa Kapustina,  Ľudmila Lipková, Yakov Silin and Andrei Drevalev (2020) identify four main reasons that led the U.S. to the greatest trade war between the U.S. and China: a) to reduce the U.S. deficit of bilateral trade and increase the number of U.S. jobs; b) to limit access of Chinese companies to American technologies and prevent digital modernisation of the industry in China; c) to prevent the growth of China’s military strength; and d) to reduce the U.S. federal budget deficit. References Bown, Chad, “China bought none of the extra $200 billion of US exports in Trump's trade deal.” Peterson Institute for International Economics, Working Paper. July 19, 2022.Bown, Chad, “Four years into the trade war, are the US and China decoupling?” Peterson Institute for International Economics, Working Paper. October 20, 2022.Bown, Chad, “US imports from China are both decoupling and reaching new highs. Here's how.” Peterson Institute for International Economics, Working Paper. March 31, 2023. Kapustina, Larisa, Ľudmila Lipková, Yakov Silin and Andrei Drevalev, “US-China Trade War: Causes and Consequences.” SHS Web Conference. Volume 73, 2020: 1-13.McKibbin, W., M. Hogan and M. Noland (2024), “The International Economic Implications of a Second Trump Presidency.” Peterson Institute for International Economics, Working Paper 24-20. 

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском My analysis of South Korean relations with Egypt and a comparison with China, my academic and research specialty, comes as Egypt and South Korea celebrate the 30th anniversary of the establishment of diplomatic relations on April 14, 2025. Relations between the two countries have witnessed continuous development, encompassing various political, economic, cultural, and educational fields over the past three decades. Egyptian-Korean relations date back to 1948, when Egypt officially recognized the independence of the Republic of South Korea. Egyptian-South Korean cooperation currently extends to development cooperation for the next five years to meet development requirements, promote the transition to a green economy, and expand sustainable infrastructure projects.  Especially with South Korea's selection of Egypt as a strategic partner in its development cooperation plans for the period 2022-2026. While China is investing in its massive Belt and Road Initiative, and Russia is using its security arms to strengthen its presence in Africa, South Korea is focusing on a different kind of belt related to food security. The South Korea-led Rice Belt Initiative, particularly within the African continent, aims to boost rice production in African countries by introducing high-yielding rice varieties, providing seeds, providing training, and supporting irrigation systems. Through partnerships with eight African countries, most notably Cameroon, Gambia, Ghana, Guinea-Bissau, Kenya, Senegal, and Uganda, South Korea is investing in agricultural capacity building and promoting rice cultivation and distribution in these and other African countries to enhance food security through partnerships between South Korea and African countries.  Through major South Korean initiatives, such as official development assistance, capacity building programs, technology transfer, and the Rice Belt, South Korea aims to bridge the development gap and strengthen its role as a pivotal global power. With the arrival of US President “Trump” in his second term, following a series of trade wars against China during his first term and his increase in tariffs on China by more than 100%, relations between the United States and China have become fraught with tension, especially with China's firm response to the US administration with a policy of reciprocal retaliation, Beijing's reciprocal increase in tariffs imposed on US goods and products, and even China's imposition of trade restrictions on US companies operating within its territory, particularly those owned by the well-known American businessman “Elon Musk”. Here we see the extent to which South Korea currently benefits from the tensions between the Chinese and American superpowers, as it is a smaller player in managing relations between the major powers.  This is precisely what Keun Lee, former vice chairman of the National Economic Advisory Council to the South Korean president, winner of the 2014 Schumpeter Prize, and author of “China: Technological Leapfrogging and Economic Catch-Up: A Schumpeterian Perspective”, which is issued by: (Oxford University Press, 2022), in this aforementioned book, Keun Lee analyzes the situation for South Korea and the nature of the dispute between China and the United States, emphasizing that South Korean companies are reaping significant benefits from the trade and technological restrictions imposed by the United States on China, which have at least slowed the “Sinicization” of manufacturing and global value chains. Since South Korea and China produce a large number of the same goods and types, such as: (consumer electronics, batteries, cars, ships), and more, according to Keun Lee’s analysis, the less China’s share of the American and Western market diminishes, the more South Korea will have. Indeed, Western and American sanctions, in particular, imposed on the Chinese tech giant Huawei, have given a boost.  Strong sales of wireless systems produced by Samsung. Similarly, if Chinese industry has less access to Western technology, it is likely to turn to South Korean companies. South Korea is attempting to capitalize on this by adopting a new development strategy for partnerships with Egypt and other African countries, and holding the first South Korea-Africa summit in June 2024. Here, we can draw a simple comparison between the development roles of China and South Korea within the African continent. China primarily focuses on its massive financial power through its Belt and Road Initiative, as well as its efforts to fundamentally change the nature of African countries. What is interesting is that South Korea, which possesses significant strengths, has decided to join the bandwagon to win in Africa. South Korea is keen to move away from following the Chinese model in Africa. As noted during the first South Korea-Africa summit in June 2024, South Korea is serving as a bridge or communication channel in the international community as a responsible middle power, based on its own development experience compared to China.  Noting South Korea's keenness to avoid presenting itself as a strong competitor to China or others within the African continent The modern history of South Korean relations with Africa begins with the Korean War on June 25, 1950, with the participation of units from the Ethiopian and South African armies within the United Nations forces. This included the “Mehal Sevare Unit”, the bodyguard unit of the Ethiopian emperor, which was sent to support South Korea, despite Ethiopia being one of the poorest countries in the world at the time. This Ethiopian aid contributed to building friendly and special relations between the two countries after the war ended. As a result, an African Union office in South Korea was established within the Ethiopian embassy, and the South Korean government established a memorial garden in honor of the Ethiopian soldiers who participated in the war in support of South Korea. Given the importance of the partnership with South Korea, President El-Sisi's keenness during his visit to South Korea was to enhance the Egyptian state's efforts to localize South Korean industry in Egypt, reflecting the promising prospects for diverse and anticipated Egyptian partnerships with South Korea. Here, we find President El-Sisi's commitment to localizing South Korean technology in Egypt, which was clearly demonstrated by the localization of the South Korean railway car industry in Egypt in the Suez Canal Economic Zone. This aims to gradually enhance Egyptian local content and bolster Egyptian supply efforts to markets in the Arab region and Africa, through Egyptian partnerships between the public and private sectors in South Korea. Therefore, we find President Sisi keen to benefit from South Korean expertise in localizing technology and attracting foreign investment, which contributes to the creation of approximately 5,000 job opportunities for Egyptian youth in the Suez Canal Economic Zone, achieving social and economic progress in the region. On the development front, South Korea is keen to provide development grants to Egypt and all African countries, through the “Korea International Cooperation Agency” (KOICA), especially in the fields of higher education, intellectual property, vocational training, information technology, establishing an electronic system for government procurement, women's economic empowerment, and combating violence. Meanwhile, South Korea's concessional development financing is diversified, covering (railways, subway car manufacturing, knowledge transfer programs, and government capacity building programs). Egyptian-South Korean cooperation has increased in light of the strategic partnership between the two countries, particularly in light of South Korea's selection of Egypt as its strategic partner in development cooperation for the next five years.  Many South Korean projects in Egypt are being financed through the concessional financing window provided by the Korea Economic Development Cooperation Fund (KEDCF), a subsidiary of the Export-Import Bank of Korea. This was evident in a $460 million South Korean development financing agreement with Egypt to implement the project to manufacture and supply 40 train units (320 cars) for the second and third lines of the Greater Cairo Metro. South Korean companies also have a significant presence in the New Administrative Capital and the Suez Canal Development Corridor, most notably Hyundai Rotem in the Suez Canal Economic Zone. The Hyundai Rotem Group includes more than 14 South Korean companies operating in three main sectors: trains and railway equipment, military industries related to land weapons, heavy machinery and equipment, energy infrastructure, and iron and steel. It is also a leading company in modern technologies related to the use of hydrogen fuel in vehicles and equipments. Egyptian-South Korean relations are diverse across several fields, not limited to development cooperation efforts between the two countries, but also extend to trade, investment, and culture, with many South Korean companies investing in Egypt in various fields, such as technology, communications, electronics, and others. During his recent visit to South Korea, the Egyptian government and Egyptian President Abdel Fattah el-Sisi were keen to advance cooperation with the South Korean side and provide full support for South Korean investments in Egypt, encompassing a wide variety of fields. Korea is one of Egypt's most important trading partners in East Asia. South Korea is also an important source for the transfer of industrial expertise and technology to Egypt.  There are many areas of potential cooperation between South Korea and Egypt in the Dabaa nuclear power plant projects, the most prominent of which, are: (joint manufacturing in the electronics sector, where Korean products for Samsung and LG are manufactured by Egyptians). Furthermore, 90% of Egypt's electronics exports are conducted in cooperation with South Korea. In addition, there is fruitful cooperation between the two countries in electric vehicle projects, seawater desalination, and railway development projects. In 2022, South Korea announced a $1 billion loan to Egypt from the South Korean Development Cooperation Fund. This comes as part of South Korea's efforts to build a cooperative partnership with Egypt and promote sustainable development between the two countries. This agreement also aims to conclude trade agreements and expand the scope of South Korean cooperation with Egypt in the environmentally friendly transportation, maritime, and space development sectors. At the same time, both countries agree on the importance of overcoming the climate crisis, especially after Egypt hosted the (COP27 international climate conference) in Sharm El-Sheikh. In recent years, South Korea has been seeking to create a state of rapprochement with the African continent, especially Egypt. The first Korea-Africa summit, held in early June 2024, marked a historic milestone, as South Korean ex-President “Yoon Suk-yeol” and leaders from 48 African countries met to deepen trade and economic cooperation. This led to the convening of the Korea-Africa Summit, a new initiative launched by South Korea to support cooperation with African countries in light of the challenges facing countries worldwide, particularly food security, climate challenges, and supply chain issues. Given Egypt's prominent position in Africa, South Korea sought to establish a strategic partnership with Africa, particularly Egypt, based on three axes: promoting trade and investment to achieve economic development and confronting global challenges, such as: (climate change and food security, and promoting peace, security, and cooperation in international forums). During the first Africa-South Korea summit, South Korean ex-President Yoon announced South Korea's commitment to increasing development assistance to Africa, pledging $10 billion over the next six years. This significant financial support underscores South Korea's interest in Africa's vast mineral wealth and its potential as a major export market. In his closing remarks, ex-President “Yoon” stated that: “the important Minerals Dialogue launched by South Korea and Africa sets an example for a stable supply chain through mutually beneficial cooperation and contributes to the sustainable development of mineral resources worldwide”. On the Chinese side, given the Chinese government's commitment to holding China-Africa summits, known as “FOCAC”, since 2002, which bring together most African leaders, these China-Africa summits hold significant significance for Western governments and the US administration. While Washington maintains its primary military alliance in East Asia through U.S. Forces Korea—stationing approximately 28,500 troops in South Korea—its growing concern also extends to Africa, where China’s expanding influence, exemplified by the China-Africa summits, represents a new source of geopolitical friction and tension in U.S.-China relations. Through its advanced economic ties with African countries, China provides significant assistance to African regimes that the United States and Europe are seeking to pressure to review their records on human rights, good governance, monopoly policy, and other issues. Sino-African relations have also witnessed rapid development, especially in the economic field, which China prefers as an easy and acceptable path in its dealings with developing countries, whether in the form of trade exchange, loans, grants, or investment gifts. These are characterized by the absence of political conditionality, which distinguishes them from their Western counterparts and makes them acceptable to poor African societies, both at the official and opular levels. This facilitates the task of the Chinese actor in penetrating these societies until Beijing became the main trading partner of the African continent, as Beijing considers its relations with Africans an important part of its strategy to enhance its economic and political influence at the global level and to be the center of the circle for these countries within the concept of its soft and quiet power, within the framework of the policy of relations between the countries of the South-South.  To this end, China seeks to increase its political position within the African continent and address African sensitivities, which are burdened with negative perceptions of Western colonialism. This is achieved by talking about reforming international institutions and glorifying national sovereignty, which was rediscovered after the Western colonial withdrawal from Africa. China also declares its solidarity with the countries of the South through economic positions and development promises. This is the same kind of talk that Africans hear from major powers like Beijing, in the face of Western ambitions. Based on this, we understand the extent of competition between China and South Korea in Egypt and other African countries, and their adoption of African summit policies through solidarity and development cooperation with Egypt and across the African continent, with African countries' ambitions to diversify their businesses, they are pushing both Beijing and Seoul to embrace their vision of building a multipolar world, the right of Africans to a permanent seat on the Security Council after UN reform, opposition to colonialism in all its new forms and manifestations, and the depoliticization of domestic issues such as human rights and democracy, among others.