Trump + Vance = ‘Tariffs are coming’ (2024)

By PHELIM KINE

with STUART LAU

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Hi, China Watchers. Today we dig into what this week’s Republican National Convention says about U.S.-China ties under a possible second Trump administration, track the muddled GOP messaging on Taiwan and dish on the China-related news from the Aspen Security Forum. We also profile a book that debunks the narrative of Cold War era heroic Chinese pilot defectors to Taiwan as an “expensive joke.”

Let’s get to it. — Phelim.

J.D. VANCE — TRUMP’S NEW CHINA-TARGETED TRADE WARRIOR

Donald Trump’s pick for VP is a China hawk who has made criticism of Chinese trade and financial policies a key part of his political brand. That means J.D. Vance could become the trade warrior-in-chief in a second Trump administration.

Vance is already known for his populist messaging about the damage wreaked on his home state of Ohio by what Trump calls China’s “unfair trade practices.”

And Vance “is in lockstep with Donald Trump, on foreign policy generally, but China specifically,” said Republican strategist Alex Conant. Like Trump, Vance is “consistently a China critic,” Conant said.

Moreover, Vance has gotten more hawkish since his congressional campaign in 2022. “He has adapted and evolved into really thinking critically and aggressively on China from when he was running for Senate,” said Greta Peisch, former General Counsel of the Office of the United States Trade Representative and currently a partner at Wiley Law.

Rather than try to moderate Trump’s trade policy instincts, Vance is likely to push Trump to go harder. Vance is “even more hawkish on trade than Trump has been – I think it’s very much a signal that tariffs are coming,” said Peter Harrell, former senior director for international economics in the Biden administration and currently a fellow at the Carnegie Endowment for International Peace.

Trump signaled as much in an interview with Bloomberg published Wednesday in which he touted the possibility of 50 percent tariffs on Chinese imports (though that is lower than the 60 percent tariffs he was reportedly considering earlier this year). “Tariffs do two things. Economically, they’re phenomenal … and man, is it good for negotiation,” Trump told Bloomberg.

The Republican National Committee’s 2024 party platform, approved at the GOP convention on Monday, gives Vance the ideal vehicle to lead an intensified trade war with China. The platform calls for Republicans to “revoke China’s most favored nation status, phase out imports of essential goods and stop China from buying American real estate and industries.” The “most favored nation” status, also known as Permanent Normal Trade Relations, allows World Trade Organization members preferential tariff rates.

That echoes legislation that Vance co-sponsored last year with Sens. Tom Cotton (R-Ark), Rick Scott (R-Fla.) and Ted Budd (R-N.C.), which aimed to strip China of its most favored nation status. The bill would impose annual presidential approval of the conditions of the U.S.-China trade relationship using metrics including Beijing’s human rights record.

But removing China’s most favored nation status would result in the imposition of new, higher tariffs on all Chinese imports, including a range of consumer products that have not been targeted under the existing 301 tariffs imposed by the Trump and Biden administrations. And that could be a recipe for trade chaos.

“It may be difficult to move supply chains and find alternate sources very quickly, so you would see either prices go up or certain products just not being available as readily at the same price point as they are now,” said former USTR official Peisch.

Vance’s challenge will be convincing potential voters of the longer-term gain of putting China in a trade pariah category that includes Russia, North Korea, Cuba and Belarus. If the U.S. were to strip China of the most-favored-nation designation, “What are we saying to China about what we want our relationship to be with them in the future and how we’re treating them?” Peisch said.

Vance and the GOP are counting on a U.S. electorate willing to endure an end to lower-priced Chinese goods as the cost of a stronger U.S. manufacturing base and less reliance on China. That will require “a little bit of pain in order to deal with the fundamental restructuring that we have to have in our trading relationships in order to have a sounder, fairer, more just economy at home, and to fix our national security problems vis a vis China,” said Alexander Gray, former chief of staff of the National Security Council in the Trump administration and an adviser to Trump’s 2016 campaign.

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TRUMP SCRAMBLES GOP MESSAGING ON TAIWAN

At the same time, Donald Trump is fueling doubts about his commitment to protect Taiwan from Chinese aggression in a second presidential term. Asked by Bloomberg if he’d defend Taiwan against China, Trump responded by complaining about the self-governing island’s industrial prowess, its proximity to China and the cost of protecting Taiwan.

“They did take about 100 percent of our chip business. I think Taiwan should pay us for defense … Taiwan doesn’t give us anything. Taiwan is 9,500 miles away. It’s 68 miles away from China. A slight advantage, and China’s a massive piece of land, they could just bombard it,” Trump said.

Those comments followed assurances to China Watcher from senior GOP lawmakers this week that Republican support for Taiwan remains rock-solid. “Taiwan is a steadfast ally of the United States, and U.S. support for Taiwan will not and should not change regardless of the outcome of the 2024 elections,” said House Indo-Pacific subcommittee chair Young Kim (R-Calif.).

Trump’s views reaped a sharp rebuke from Democrats. Abandoning Taiwan “would mean betraying one of the world’s most vibrant democracies to the Chinese Communist Party,” said Rep. Raja Krishnamoorthi (D-Ill.), ranking member of the House Select Committee on China, which has advocated for a stronger U.S. commitment to Taiwan’s defense. The GOP side of the committee trod more carefully with a statement attributed to a majority spokesperson rather than committee Chair John Moolenaar (R-Mich.). The statement didn’t reference Trump’s comments and said the committee remains “committed to supporting our friends in Taiwan.”

Taiwan’s diplomatic outpost in Washington also chose to ignore Trump’s comments. “Preserving peace and stability in the Taiwan Strait is in the interest of the United States and the international community…Taiwan is doing its part by actively strengthening deterrence capabilities with the support of the United States under the Taiwan Relations Act,” the Taipei Economic and Cultural Representative Office said in a statement. Chinese embassy spokesperson Liu Pengyu told China Watcher: “The Taiwan question is purely China’s internal affair and brooks no external interference.”

TRANSLATING WASHINGTON

— U.S. BLASTS CHINA’S ‘PREDATORY’ TRADE PRACTICES: The Biden administration on Wednesday accused China of “predatory” practices that hurt workers around the world and said it saw no “realistic” chance of Beijing improving its behavior. David Bisbee, the United States’ deputy permanent representative to the World Trade Organization, outlined the long list of U.S. concerns in remarks prepared for delivery during a periodic review of China’s trade regime. “Beijing operates its non-market economy in a ‘predatory’ manner … because of the size of its economy and the volume of its trade, the PRC is uniquely positioned to be able to use its state-directed approach to the economy to eliminate foreign competition and amass market power,” Bisbee said. POLITICO’s Doug Palmer has the full story here (for U.S. pros!)

TRANSLATING EUROPE

EU CHIEF VOWS TO DETER BEIJING ON TAIWAN IN SECOND TERM: Ursula von der Leyensaid today she would seek to “deter China” from invading Taiwan as part of her bid to run for a second term as European Commission president. “The Indo-Pacific has become a decisive region for the world’s future,” she outlined in her manifesto entitledEurope’s Choice.

“We will work with Japan, Korea, New Zealand and Australia with whom we face common challenges … This includes our collective efforts to deploy the full range of our combined statecraft to deter China from unilaterally changing the status quo by military means, particularly over Taiwan,” she said, making her clearest statement to date. The U.S. believes such a war could happen by 2027, which would be in the middle of von der Leyen’s potential second mandate.

BEIJING SHORES UP BUDAPEST AMID EU CRITICISM: As the European Union lashed out on Hungarian Prime Minister Viktor Orbán’s visits to Moscow, Beijing and Mar-A-Lago, China on Wednesday backed Budapest’s efforts to lobby for a cease-fire between Russia and Ukraine. The EU sees such proposals as forcing Ukraine to give up land occupied by Russia. “Hungary has played a constructive role in mediating for peace,” Chinese Foreign Minister Wang Yi told Péter Szijjártó, his Hungarian counterpart, according to Beijing’s readout.

Wang added: “China is ready to work with Hungary to bring together more forces supporting peace, make more rational voices, and promote the situation toward political settlement.” Szijjártó, on his part, used the phone call with Wang to blame “Europe’s war advocates,” saying: “They’ve attacked us, but we won’t be deterred from our peace mission.”

DUTCH CHIP GIANT STILL RELIANT ON CHINA: China is still the dominant customer of Dutch chip printing machine supplier ASML, according to the company’s earnings presented Wednesday, Pieter Haeck writes in. China accounted for almost half of ASML’s net sales, raising doubts about whether restrictions imposed by the U.S. and the Netherlands on the company’s sales to China genuinely have an impact. Almost simultaneously, Bloomberg reported that the U.S. informed its allies it had floated even tougher curbs in the chips war.

HEARD AT THE ASPEN SECURITY FORUM

— ASPEN ANGSTS OVER CHINA: Members of a congressionally-appointed panel to review the U.S. national defense strategy warned Wednesday at the Aspen Security Forum that Washington has allowed Beijing to challenge U.S. military dominance in the Indo-Pacific, POLITICO’s Eric Bazail-Eimil writes in. Former Army vice chief of staff Jack Keane warned China “is outpacing the United States and has largely negated the United States military advantage in the western Pacific after two decades of China’s very focused investment.” He added China has built up its military hardware so much over the last two decades that “you name the platform, except for submarines, and they are outpacing us” and that direct kinetic conflict between the U.S. and China remains within the realm of possibility.

— AMBASSADOR BURNS DOWNED BY COVID: U.S. ambassador to China, Nicholas Burns, canceled his appearance at Aspen this week (and a follow-up event at CSIS on Friday) after coming down with Covid in Beijing, Aspen Strategy Group co-chair Joseph Nye told forum attendees on Tuesday. Burns isn’t the only no-show at Aspen. The attempted assassination of Donald Trump scrambled the Aspen schedule with multiple senior U.S. officials canceling their appearances to focus on the official response to the incident (POLITICO’s Nahal Toosi has the full story here).

— SINGAPORE MINISTER: AVOID ‘CATACLYSMIC’ INDO-PACIFIC CONFLICT: The U.S. and China should do whatever they can to avoid possible conflict in the Indo-Pacific, Singapore’s Defense Minister Ng Eng Hen said at Aspen on Tuesday. “That will be cataclysmic, whatever the outcome, it would test Pax Americana,” said Ng. Any such conflict “will be very painful and will probably be life changing,” Ng warned.

— U.S. CHIP CONTROLS DRIVING BEIJING ‘BONKERS’: Semiconductor export controls imposed by both the Trump and Biden administrations have effectively kneecapped China’s ability to compete with the U.S. in the development of artificial intelligence, Eric Schmidt, chair of the Special Competitive Studies Project and former CEO of Google said during a panel event at Aspen on Tuesday.

“The ones they’ve stolen and the clones are not as good — this is a profoundly important problem for them. It’s driving them absolutely bonkers,” said Schmidt. The Trump administration imposed curbs on exports to China of high-tech semiconductors in 2020. The Biden administration has followed up by imposing its own round of semiconductor export restrictions in both 2022 and 2023.

HOT FROM THE CHINA WATCHERSPHERE

— BEIJING SAYS ‘NO’ TO NUKE TALKS: The Chinese government has channeled its anger over ongoing U.S. arms sales to Taiwan by slamming the door on bilateral talks on nuclear non-proliferation. Those weapon sales “severely undermine China’s core interests and the mutual trust between China and the U.S. … Consequently, the Chinese side has decided to hold off discussion with the U.S. on a new round of consultations on arms control and non-proliferation — the responsibility fully lies with the U.S.,” Chinese Foreign Ministry spokesperson Lin Jian said Wednesday. The Biden administration calls that decision risky. “This approach undermines strategic stability. It increases the risk of arms race dynamics,” State Department spokesperson Matthew Miller said Wednesday.

The Biden administration coaxed Beijing into semi-official nuclear arms talks in March — the first in five years — amid rising concern over China’s ongoing dramatic expansion of its nuclear weapons stockpile. Beijing’s refusal to discuss nuclear proliferation issues is tactical, said Tong Zhao, a senior fellow in Carnegie China’s nuclear policy program and author of a report published Wednesday on Beijing’s nuclear strategy. The Chinese government “aims to pressure Washington into making broader geopolitical concessions” on matters including “Taiwan and various security, political, and geoeconomic issues,” Zhao said.

— BANNON BRO GUO IS GUILTY: A New York court has found exiled Chinese billionaire Guo Wengui — whose multiple aliases include “Brother Seven” and Miles Kwok — guilty on charges including money-laundering and fraud, per CNN. Guo is an associate of Trump’s former chief strategist Steve Bannon and police arrested Bannon on Guo’s yacht in 2020 on charges of defrauding contributors to a “Build the Wall” fundraiser. Guo told the New York Times in 2018 that he and Bannon bonded over the fact that they both “despise the Chinese Communist Party.”

— FIRING OF WSJ REPORTER SPARKS OUTCRY: The Wall Street Journal’s firing on Wednesday of Hong Kong-based reporter Selina Cheng has sparked criticism from human rights groups and a former senior official in the Trump White House. Cheng said her dismissal was a reprisal for refusing to obey her editors’ directive to reverse her decision to take the position of chair of the non-profit Hong Kong Journalist Association, per Hong Kong Free Press.

Cheng’s dismissal “makes a mockery of what the newspaper has always and very publicly claimed it stands for: press freedom,” said Yaqiu Wang, research director at the nonprofit advocacy organization Freedom House. Former deputy national security adviser Matt Pottinger channeled his past experience as a Journal reporter and HKJA member to express “solidarity with all Hong Kong journalists.” Free speech and rule of law are “dying fast in Hong Kong, and we all have a duty against accommodating that abhorrent trend,” Pottinger told China Watcher. The Wall Street Journal declined to comment to POLITICO, but told the Hong Kong Free Press that the paper had “made some personnel changes today [but] we don’t comment on specific individuals.”

HEADLINES

ProPublica: Jiaai Zeng died weeks after starting work at an Oklahoma marijuana farm. His family wants answers

Foreign Policy: The winners from U.S.-China decoupling

Foreign Affairs: Searching for an endgame with China

Bloomberg: ‘I don’t like China:’ What JD Vance has said about Beijing

HEADS UP

— U.S. CORPORATE TITANS ARE BEIJING-BOUND: The U.S.-China Business Council will lead a delegation of American corporate executives from firms including Starbucks, Nike and Goldman Sachs to Beijing next week, per the South China Morning Post on Wednesday. The execs aim to press the flesh of senior Chinese Communist Party officials in hopes of hints on what this week’s Third Plenum high level economic policy meeting (previewed in this China Watcher) might mean for foreign investors. A council spokesperson implicitly confirmed the report by telling China Watcher to stand by for “whatever statement we may issue” on the trip.

ONE BOOK, THREE QUESTIONS

The Book: Defectors from the PRC to Taiwan, 1960-1989: The Anti-Communist Righteous Warriors

The Author: Andrew Morris is executive director of the office of academic programs and planning at California Polytechnic State University.

Responses have been edited for length and clarity.

What is the most important takeaway from your book about Chinese military pilot defectors to Taiwan?

There was a notion that the island’s KMT [or Nationalist party] return to mainland China could be heralded or even triggered by the defections of aggrieved victims of Communist rule. And the pilots who flew their MiG jet fighters to freedom in Taiwan or to South Korea aroused the most fervent wish casting by Taiwan’s rulers.

What was the most surprising thing you learned while writing this book?

How quickly the belief system about the Chinese pilot defector came to an end during the mid- to late 1980s.

This was due in part to gross misbehavior by some famed defectors. But it also resulted from Taiwan independence activists and other dissidents who pointed out the absurd gap between the regime’s lavish treatment of mainland defectors and the consistently inhumane treatment of so many opponents of KMT one-party rule.

By the time of the last major military defection in 1989, the once-compelling welcome of brave anti-Maoist pilots was viewed as an expensive joke.

How problematic is it for Taiwan’s international image that it turns away asylum seekers from China?

One concern remains the same over the many decades: how to distinguish between authentic asylum seekers fleeing CCP persecution and PRC spies? The Taiwan government’s preoccupation with this question in the 1960s has struck many as absurd, but it was based on very real security concerns. And it still is, especially in the face of the PRC’s unrelenting work to subvert and destroy Taiwan’s democracy.

Got a book to recommend? Tell me about it at [emailprotected].

MANY THANKS TO: Heidi Vogt, Doug Palmer, Nahal Toosi, Eric Bazail-Eimil, Pieter Haeck and digital producers Emma Cordover and Dean Southwell. Do you have tips? Chinese-language stories we might have missed? Would you like to contribute to China Watcher or comment on this week’s items? Email us at [emailprotected] or [emailprotected].

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