EnThe Trump administration might not limit its use of trade policy simply to deficit decreasing / job creating ends. In an interview with the Financial Times President Trump indicates that “if China is not going to solve North Korea, we will”. When asked about how to achieve that he stated “I think trade is the incentive. It is all about trade.”
It isn’t clear whether this relates to the U.S. leveraging its trade policy with China – e.g. looser or stricter terms depending on China’s actions – or an expectation that China adapts its trade with North Korea. The former is a blunt instrument given the breadth of U.S.-China trade, the lack currently of talks towards any sort of free trade deal and the difficulty of deciding which parts of the policies relate specifically to North Korea. On the latter, as outlined in Panjiva research of February 20, China is already implementing sanctions on coal at the UN’s behest.
China might also look to reduce other areas of trade with South Korea. Blocking further imports may have limited leverage. Panjiva data shows that coal accounted for 37.4% of total purchases in 2016. The other major area is apparel produced in North Korea, which was worth $732 million.
Source: Panjiva
In terms of China’s exports to North Korea the biggest line of shipments is food. Restricting these may not be an option, however, as it would likely hurt the population directly rather than the ruling class. Shipments of vehicles – mostly commercial – electronics and fabrics (used in apparel manufacturing) might provide useful options. The three groups together accounted for 24.1% of China’s $3.16 billion of shipments in 2016.
Source: Panjiva
