Trump Is Considering the Worst Possible Response to the North Korean Threat

Withdrawal from KORUS would be a self-inflicted wound.

Photo taken on January 11, 2011 shows containers stacked up at a terminal in the southeastern port city of Busan.  South Korea's economy grew at an eight-year high of 6.1 percent last year, the central bank said on January 26, 2011, with fourth-quarter growth slowing compared with July-September but rising from a year earlier.   AFP PHOTO / PARK JI-HWAN (Photo credit should read PARK JI-HWAN/AFP/Getty Images)
Photo taken on January 11, 2011 shows containers stacked up at a terminal in the southeastern port city of Busan. South Korea's economy grew at an eight-year high of 6.1 percent last year, the central bank said on January 26, 2011, with fourth-quarter growth slowing compared with July-September but rising from a year earlier. AFP PHOTO / PARK JI-HWAN (Photo credit should read PARK JI-HWAN/AFP/Getty Images)
Photo taken on January 11, 2011 shows containers stacked up at a terminal in the southeastern port city of Busan. South Korea's economy grew at an eight-year high of 6.1 percent last year, the central bank said on January 26, 2011, with fourth-quarter growth slowing compared with July-September but rising from a year earlier. AFP PHOTO / PARK JI-HWAN (Photo credit should read PARK JI-HWAN/AFP/Getty Images)

As North Korea escalates its nuclear threat, many foreign-policy minds will set to work thinking about the best possible response. For the moment, though, think about the problem a different way — what would be the worst possible response?

Here’s a possibility: The United States could respond by imposing economic sanctions on its ally, South Korea. It would be a deliberate case of friendly fire in the looming conflict.

This might sound utterly absurd, but it is reportedly the policy under consideration by the Trump administration. The president is contemplating a withdrawal from the 2012 free trade agreement between the two countries (known as KORUS) and may act this week.

As North Korea escalates its nuclear threat, many foreign-policy minds will set to work thinking about the best possible response. For the moment, though, think about the problem a different way — what would be the worst possible response?

Here’s a possibility: The United States could respond by imposing economic sanctions on its ally, South Korea. It would be a deliberate case of friendly fire in the looming conflict.

This might sound utterly absurd, but it is reportedly the policy under consideration by the Trump administration. The president is contemplating a withdrawal from the 2012 free trade agreement between the two countries (known as KORUS) and may act this week.

To be fair, the withdrawal was under consideration before Kim Jong Un’s latest nuclear test. But that doesn’t make it any less misguided. The alliance with South Korea and the faceoff with the North Korean regime is hardly new, after all, dating back over 65 years. This undermining of a key alliance recalls the first days of the Trump administration, when the president withdrew the United States from the Trans-Pacific Partnership. That agreement heavily revolved around trade with Japan, another key regional ally. Torpedoing the KORUS agreement now would only do further damage to U.S. standing in the Asia-Pacific region.

It is difficult to tell the exact impetus for the KORUS withdrawal idea. There are several candidates. The United States runs a trade deficit with South Korea. This agitates the Trump administration, although economists neither attach much significance to a bilateral trade deficit nor accept any strong link between deficits and trade policy. The administration tried to demand a renegotiation of the agreement last month, but the talks went poorly, as the South Koreans (understandably) asked for a study to find out whether there was any link between KORUS and the trade deficit.

Oddly enough, the administration had earlier decided to back off its strident criticism of China when President Donald Trump drew a connection between China’s support in dealing with North Korea and U.S. lenience in commercial policy. It is hard to see the United States rewarding China for its cooperation against North Korea and not accommodating South Korea, where the United States has almost 25,000 troops stationed, facing north.

Stranger still is that South Korea has already suffered economically — for cooperating with the United States on missile defense. South Korea had agreed to host the Terminal High Altitude Area Defense system (THAAD), which is designed to shoot down ballistic missiles. China reacted poorly and reportedly instructed tour operators to stop sending Chinese travelers to South Korea (Chinese tourists accounted for almost half of South Korea’s tourist visitors last year). It seems particularly perverse that, after this, the United States would choose to hit South Korea gratuitously.

Given the enormous foreign policy disadvantages to a KORUS withdrawal, one might be tempted to look for an economic motivation. In fact, the economic arguments tilt just as heavily against. If nothing else, without KORUS, the United States would revert to applying relatively low tariffs on imports from South Korea, while South Korea’s tariffs on U.S. goods would be significantly higher.

This would truly be a self-inflicted wound. The Trump administration sometimes seems to believe that threatening to blow up a trade agreement will make partners more amenable to talking. An unfortunate, likely alternative could be that when the United States trains its commercial fire on them, our erstwhile allies treat it as a hostile act.

Photo credit: PARK JI-HWAN/AFP/Getty Images

Phil Levy is the chief economist at Flexport and a former senior economist for trade on the Council of Economic Advisers in the George W. Bush administration. Twitter: @philipilevy

More from Foreign Policy

Two unidentified military vessels off Taiwan
Two unidentified military vessels off Taiwan

Beijing’s Taiwan Aggression Has Backfired in Tokyo

Military exercises have stiffened Japanese resolve.

Russian President Vladimir Putin
Russian President Vladimir Putin

How to Take Down a Tyrant

Three steps for exerting maximum economic pressure on Putin.

A Taiwanese military outpost is seen beyond anti-landing spikes along the coast in Kinmen, Taiwan, on Aug. 10.
A Taiwanese military outpost is seen beyond anti-landing spikes along the coast in Kinmen, Taiwan, on Aug. 10.

Why Doesn’t China Invade Taiwan?

Despite Beijing’s rhetoric, a full-scale invasion remains a risky endeavor—and officials think the island can be coerced into reunification.

Crosses, flowers, and photographs mark the graves of victims of the battles for Irpin and Bucha at the cemetery of Irpin, Ukraine, on May 16.
Crosses, flowers, and photographs mark the graves of victims of the battles for Irpin and Bucha at the cemetery of Irpin, Ukraine, on May 16.

Russia’s Brutal Honesty Has Destroyed the West’s Appeasers

Yet plenty of Western intellectuals and politicians still ignore what Moscow is saying loud and clear.