Apple shows why Trump's threat to sever China trade over Korea rings hollow

President Donald Trump tweeted on September 3 that the US “is considering, in addition to other options, stopping all trade with any country doing business with North Korea” after it performed a nuclear test.

Though North Korea currently trades with nearly 100 countries, this threat was almost certainly aimed at China, by far its biggest trading partner.

And it is technically something that a US president can do. Under the International Emergency Economic Powers Act of 1977, the president can impose trade restrictions in the face of an “unusual and extraordinary threat.”

Nevertheless, it is an empty threat. In the same way that North Korean leader Kim Jung Un is unlikely to commit political (and national) suicide by following through on a war with the US , Trump is unlikely to commit political suicide by following through on this hyperbolic threat.

This is because the damage to the US economy, the global economy and international relations due to a cessation of US -Chinese trade would be catastrophic, so much so that it is nearly impossible to predict exactly how it would play out.

Some have tried to do this anyway, such as by citing the value of American trade with China, which was about US$650 billion in 2016, or around 4 percent of US GDP. Some simple thought experiments illustrate why this barely scratches the surface of the impact.
READ MORE