tariffs and impeachment

East Asia just this week

I intended to write exclusively about a report from the U.S. Chamber of Commerce Foundation indicating companies are not inclined to withdraw from their China ties, despite many hopes for a decoupling between our two economies. I suspect the report’s most potent conclusion—that most companies intend to remain focused on the Middle Kingdom—will still pertain. However, the deterioration in bilateral ties and tariff impositions leaves me all the more wary of predicting business actions.

Companies may have strategies but also respond to immediate volatility, consumer demand, and geostrategic upheaval. The result is that the tariffs could destabilize plans to expand into the Chinese consumer market, an American goal stretching nearly two centuries’ duration, or continue producing overseas for various reasons (labor costs, resources, sunk costs of existing factories, and similar financial assessments). Businesses acknowledge roadblocks within the Middle Kingdom, not the least of which are CCP policies on cyber and intellectual property and Xi Jinping’s decade-long determination to ensure less foreign exposure (precisely for fear of the power foreigners could have over the country’s economy).

The 70% of companies analyzed, however, recognize significant dangers to their future but weigh the benefits of engagement as preferable. The Wall Street Journal quotes corporate executives simultaneously discussing China’s threats as they welcome opportunities. They are not, hence, going into the future with their eyes closed, as might have been the case twenty years back.

President Trump’s 104% draconian tariffs on products from China might change that. China’s drastic response may similarly cause companies to reconsider for fear of offending the White House and/or having little comfort about how the PRC could retaliate against Americans. We don’t know how this trade war will continue expanding, as none of us has lived through this level of economic retaliation.

We do know a couple of things. President Trump seems determined to erase the bilateral trade deficit with China (and other countries) without heed to its unidimensional role in global affairs. As one columnist wrote this morning, he views trade deficits as a further example of losing in a bilateral contest as if capital flows were that simple between countries. His gut approach may be successful, but it flies in the face of the overwhelming majority of economic analyses, including those of many business leaders with whom he golfs and chats regularly.

In the same way that Trump sees things as zero-sum, Xi Jinping is unlikely to cave to Trump’s demands, fearing it would indicate a return to “national humiliation.” Much as Taiwan is a central argument to the CCP’s narrative on why it alone can save China from foreigners, menacing actions on trade do not represent a topic about which Xi can easily acquiesce. That doesn’t mean Trump and his Chinese counterpart won’t find a nifty solution based on both men redefining their “victories,” but that appears to be a distant prospect as of Wednesday morning.

As I have noted more than once in Actions Create Consequences, events rarely follow a straight line, so time will tell whether either of these men actually is determinative of the world’s future. That is not to say the period will be copacetic as consequences unfold.

At the same time, a remarkable tribute to our engagement with the Republic of Korea occurred over the last few days, lost amid the frantic conversations about trade. Korean President Yoon Suk Yeol initiated a self-coup last December to seize unlimited executive power, only to find that his fellow citizens preferred constitutional governance with its mandates of checks and balances. The protests in Seoul forced the unpopular Chief Executive to back down before the country’s legislature impeached him. The case was in limbo for several months as several peculiarities prevented the RoK’s senior Court from ruling, providing the weakened leader hope of a reprieve.

The Court’s repudiation of his actions showed the power of following a constitutional system. As angry Korean citizens learned more about the flow of December’s events, casting doubt on any emergency (unless defined as paltry political support) as the justification, it took national patience to pass through the required steps to oust Yoon. Yet last week’s decision coincided with respect for the rule of law by all parties.

Since the military surrendered to democratic governance in the late 1980s, South Korea has seen several of its democratically elected presidents face legal actions over the past four-plus decades. Yet, these legal challenges proceed without major violence, a characteristic we can no longer claim.

The existential threat of a hostile North Korean regime so close to the capital city is a reason for such a commitment to constitutional norms. The nation’s experiences of war, followed by personalist rule and anti-opposition actions, probably played a role as well. However, the South Koreans deserve more than a footnote in history for what they accomplished in support of democratic rule over the past four months. We have evidence that our own system is less committed to peaceful dispute resolution according to constitutional norms than is South Korea so I applaud their guts and persistence.

For decades, people have been saying that Asia will ascend in the twenty-first century. This past week, conflicting indicators have raised questions about what precisely that would mean—for us and for the world.

I welcome your thoughts on the tariffs, the broader deterioration in bilateral links between Washington and Beijing, or about Koreans peacefully slapping down an aggressive ruler. One can hardly see this other than a fascinating time, even if we are unsure how it will end. Please let us know your thoughts, as I don’t have an answer.

I appreciate your time reading Actions Create Consequences today. I especially appreciate the subscribers, who provide welcome resources to develop this column. Your $8 monthly or $55 annually support means a great deal.

The spring distractions are so welcome.

We expect additional yachts to return to the inner harbor (a.k.a. Spa Creek on our side of the Compromise Street Bridge) this weekend.

Be well and be safe. FIN

Justin McCurrie, “South Korean President Yoon Suk Yeol Removed from Office after Court Upholds Impeachment“, TheGuardian.com, 4 April 2025, retrieved at https://www.theguardian.com/world/2025/apr/04/south-korea-president-yoon-suk-yeol-impeachment-verdict-results-removal

David Pierson and Berry Wang, “For Xi, China’s Strongman Leader, Ceding to Trump is Not an Option”, NewYorkTimes, 7 April 2025, retrieved at https://www.nytimes.com/2025/04/07/world/asia/china-trump-tariffs.html?searchResultPosition=1

—-, “For U.S. and China, a Risky Game of Chicken with No Off-Ramp in Sight”, NewYorkTimes, 9 April 2025 retrieved at https://www.nytimes.com/2025/04/09/world/asia/china-us-tariff-trade.html

Lingling Wei, “Many U.S. Companies Plan to Keep China Ties, Survey Finds“, WallStreetJournal.com, 8 April 2025, retrieved at https://www.wsj.com/world/china/many-u-s-companies-plan-to-keep-china-ties-survey-finds-906481c9?mod=Searchresults_pos1&page=1