Can Xi Jinping build a ‘Great Firewall’ against tariffs?

Will China’s next great wall be an economic one built around the Donald Trump presidency?

Yes. And the odds of Xi Jinping succeeding increased markedly last week thanks to Trump’s trade actions.

This enterprise has been underway at least since April, when China asked for meetings with top officials from Britain, France, Germany, Italy, Spain and European Union bigwigs in Brussels. Since then, President Xi’s men lobbied Canada and Asian peers on the need for a united front against Trump’s mounting trade war on all fronts.

Common cause for allies and frenemies

The plot thickens now that Trump decided that U.S. allies won’t be spared his tariffs. Canada, the EU and Mexico hoped they would get a pass on steel and aluminum levies of 25% and 15%, respectively, and others to come. No such luck – leaving America’s supposed friends mulling retaliatory moves.

Those steps, odds are, will provoke Trump to announce even bigger taxes on imports. This escalating tit-for-tat dynamic will surely roil markets.

Tokyo, meantime, is none too happy about the White House’s planned 25% levy on auto imports, a clear and present danger to Japan Inc. profits. Though giants like Toyota Motor and Nissan Motor make millions of cars in America, some top U.S. sellers are built in Japan. Case in point: Toyota’s RAV4, which goes for about $25,000 in U.S. showrooms now. It could soon cost $31,000.

Alienating your traditional partners to slap China is short-sighted, indeed. Particularly as Trump displays a greater regard for North Korean leader Kim Jong-un than Germany’s Angela Merkel, France’s Emmanuel Macron, Canada’s Justin Trudeau, Mexico’s Enrique Peña Nieto and even his best pal, Shinzo Abe of Japan.

“Each time I think of Trump, I am lost,” Jean-Claude Juncker, European Commission chief, said last week. As researcher Elvire Fabry at the Jacques Delors Institute in Brussels told AFP: “Trump’s full-frontal assault against his allies has blurred lines and caused incomprehension.”

Similar comments are coming from Berlin, Paris, Ottawa and, increasingly, Tokyo.

But, as the Wall Street Journal reported last week, Xi is accelerating efforts to line up allies against Trump’s policies. The main targets, not surprisingly, are in Europe and Asia, where companies are anxious for greater access to the world’s biggest consumer market, China. That gives Xi quite a sales pitch.

Trump’s latest measures will do more to make China’s global appeal great again than the U.S. economy. They “may help China rally other countries to its side and allow Xi to continue to claim China is the new standard bearer of globalization and free trade,” analyst Bill Bishop, of the Axios China news site, said.

Part of the calculus here is the clock. At some point, Asia’s Trump nightmare will end – in January 2021, if not sooner given his legal troubles. Then, China, Europe and North American allies will need to rebuild relations with the world’s biggest economy. Until then, Xi may figure there’s strength in numbers — and seek to put China at the center of the global trade system. From there, he will call the shots.

Uniting Northeast Asia against Trump?

If Xi is wise, he will make Japan and South Korea centerpieces of this enterprise.

With all due respect to Premier Li Keqiang – who attended May’s Tokyo trilateral in lieu of Xi – Xi’s direct involvement alongside Abe and South Korea’s Moon Jae-in, would greatly elevate such talks. At that trilateral, China called for regularizing the summits, so now is the time to give the format more heft. Trump’s North Korea outreach is an obvious topic of conversation, but standing shoulder-to-shoulder against a White House using trade as a trolling device holds more promise.

It’s high time that Abe gave up on his dream of getting Trump to care about Tokyo’s interests. Abe should join hands with Xi and Moon to reduce trade barriers, link bond and stock markets and devise a way to pool $4.8 trillion of foreign exchange reserves. The three leaders should deepen currency-swap arrangements and harmonize tax, banking, regulatory and perhaps even customs policies to lend greater efficiency to regional trade. There is plenty of need to work together on climate change, too.

Either way, Asia and Europe must find ways to wall off economies from Trump’s unpredictability and bullying. Thankfully, China’s Xi is on it.