Trump on Sunday floated cutting off all US trade with any country that maintains economic ties to North Korea, a not-so-veiled threat to the country’s primary trading partner, China.
“The United States is considering, in addition to other options, stopping all trade with any country doing business with North Korea,” Trump wrote in a tweet.
It could be an empty threat. China remains a major US trade partner — according to the US Trade Representative, US goods and services traded with China in 2016 alone totaled an estimated $648.2 billion. Other US trade partners like India, Thailand, and the Philippines also maintain some economic ties with North Korea.
I Trump’s comments came several hours after US Treasury Secretary Steve Mnuchin called for an additional round of sanctions on North Korea on Sunday following the test of the country’s most powerful weapon yet.
In an interview on “Fox News Sunday,” Mnuchin said North Korea’s test of what it claims was a hydrogen bomb was “completely unacceptable behavior.”
“We’ve already started with sanctions against North Korea, but I’m going to draft a sanctions package to send to the president for his strong consideration,” Mnuchin said.
He added: “People need to cut off North Korea economically.”
Mnuchin also did not rule out implementing stronger regulations on Chinese companies and financial institutions that regularly interact with North Korea.
“China has a lot of trade with them, there’s a lot that we can do to cut them off economically, much more than we’ve done already,” Mnuchin said.
North Korea claimed that Kim Jong Un on Sunday inspected a hydrogen bomb that could eventually be mounted on an intercontinental ballistic missile.
Following news of the test, Trump chided China for refusing to cut economic ties with Noth Korea, and reiterated his hints at using potential military force to eliminate North Korea’s weapons.
Korea Gives Trump the Middle Finger With Bomb Test
The test is apparently Kim’s answer to Washington’s recent overtures. On August 22, Secretary of State Rex Tillerson said Pyongyang had “demonstrated some level of restraint that we have not seen in the past” and raised the possibility of talks. “Perhaps,” he said at the time, “we’re seeing a pathway to, sometime in the near future, to having some dialogue.”
Kim Yong Nam, president of the DPRK Presidium of the Supreme People’s Assembly reacts during a meeting with Hassan Rouhani, president of the Islamic Republic of Iran during their meeting in Teheran in this undated photo released on August 7, 2017 by North Korea’s Korean Central News Agency (KCNA) in Pyongyang.
On that same day, President Trump said he believed Kim was “starting to respect us.”
Kim’s initial response was to launch a salvo of three ballistic missiles on August 26 and one on August 29. The second part of the response was Sunday’s test of a nuclear bomb of some sort.
North Korea’s next step, to prove it is able to integrate its new capabilities, could be to land one or more missiles in waters near Guam, as the regime threatened to do on August 10. When Pyongyang first made that threat, it said its missiles would fly over Japan on their way to the American territory in the Pacific Ocean.
Last Saturday, Pyongyang flew a Hwasong-12 missile over the Japanese island of Hokkaido, thereby fulfilling the first part of the August 10 threat. Because the North usually carries through on specific threats—at least eventually—it is possible that Kim will send missiles to Guam soon.
The second thing Kim could do is load a nuclear device onto a ballistic missile and conduct an atmospheric test. After all, state media has twice suggested it can mate a thermonuclear device to a missile.
What now? As Bechtol, the author of North Korea and Regional Security in the Kim Jong-un Era, noted, the North Korean regime has just put President Trump on the spot. “The political fallout from the detonation will be immense,” he said in e-mail comments Sunday.
In a few days, therefore, the focus of attention will be on what the U.S. should do about Kim’s nuclear weapons and ballistic missile programs. Many, if not most analysts, say Washington’s sanctions policy has been a failure. They are obviously correct. Observers then jump to the conclusion that the administration should begin efforts to talk to the North Koreans.
In view of Pyongyang’s harsh responses to Trump’s and Tillerson’s overtures, talking to the regime, even if possible, is unlikely to produce a constructive result at this moment. Kim is feeling particularly bold now, and he may have picked this weekend to carry through on the long-awaited test because he felt the Trump team is not in a position to respond effectively.
The U.S., despite what most analysts believe, has the leverage to peacefully disarm Kim. Washington can, for instance, use its overwhelming leverage over China so that China uses its overwhelming leverage over North Korea.
What the administration should do is demand that Beijing and Moscow accept a complete embargo on North Korea. If they do not comply, the administration should threaten to impose severe costs on them. For instance, Trump could hand down what are essentially death sentences on the largest Chinese banks, like Bank of China, for laundering money for the Kim regime. The president can do that by designating them “primary money laundering concerns” under Section 311 of the Patriot Act. Such designations would deny these institutions the ability to transact in dollars.
Sanctioning the largest Chinese banks in such a manner could throw the Chinese financial and political systems into turmoil, and Beijing knows it. Therefore, the White House has the means to persuade China’s leaders to disarm the Kim regime.
Fortunately, Xi Jinping, the Chinese ruler, is particularly vulnerable at this moment. The 19th Communist Party Congress, which begins on October 18, is when Xi must consolidate his power if he is to continue strongman rule. He will be blamed by his many adversaries if relations with the U.S. are disrupted before the meeting.
Going after Chinese banks would mirror what the U.S. did to bring Iran to the bargaining table during the Obama administration, which levied stiff fines on banks. German Chancellor Angela Merkel on Saturday, in her weekly podcast, talked about employing the Iran model to get the North Koreans to agree to denuclearization.
That’s what Trump should do. As important, there is something Trump should not do. The president in comments on Saturday hinted he will this coming week give Seoul notice of termination of the U.S.-South Korea free trade agreement. Withdrawal was never a good idea for strategic reasons, and next week would be absolutely the worst time to do so. The U.S. needs all its friends and allies on board as it confronts North Korea and its backers.
In the meantime, Kim is stocking up on oil, presumably in anticipation of sanctions. So now is a particularly good time to pre-emptively hit him before he can fill up his storage tanks.
There is a window for Trump to act, and it could close soon.