Posted originally on Apr 3, 2025 by Martin Armstrong 

Tariff concerns have heightened to such an extreme level that China and Japan are discussing deepening ties. Donald Trump may be awarded a Nobel Peace Prize for that one. Japan and China, along with South Korea, held their first trade discussions in half a decade where they agreed to navigate US tariffs.

One of the aspects that made the US economy great was consumerism. Other nations lined up for the opportunity to sell goods to US citizens. But now that tariffs will heavily impact the price of goods, nations are looking for new buyers.

The Regional Comprehensive Economic Partnership (RCEP) went into effect in 2022 to lower trade barriers between 15 Asian nations. However, ongoing tensions have caused the partnership to reach a stalemate of sorts. The alliance includes 10 ASEAN members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and five regional partners (Australia, China, Japan, New Zealand, South Korea). India withdrew from the alliance but the option to rejoin is on the table. This bloc covers 30% of GLOBAL GDP and includes 30% of the world’s population or 2.2 billion people.

“It is necessary to strengthen the implementation of RCEP, in which all three countries have participated, and to create a framework for expanding trade cooperation among the three countries through Korea-China-Japan FTA negotiations,” said South Korean Trade Minister Ahn Duk-geun, referring to the Regional Comprehensive Economic Partnership.

“The three countries exchanged views on the global trade environment, and as you can see in the joint statement, they shared their understanding of the need to continue economic and trade cooperation,” the South Korean trade ministry spokesperson said.

Breaking down America’s trade with these three nations alone:

China exported $143.5 billion in goods to the US in 2024, down 2.9% from the year prior. The US imported $438.9 billion to China, up 2.8% form the year prior. The nations have a $295.4 billion trade deficit, a 5.8% YoY increase. The top US imports were electrical equipment ($127.1 billion), machinery ($85.1 billion), and toys/games ($32 billion).

Japan exported $79.7 billion in goods to the US in 2024, up 5.4% from 2023. The US imported $148 billion to Japan last year, up 0.7% YoY. The trade deficit between the two nations fell by 4.3% on an annual basis to $68 billion. The top US imports were vehicles ($45.4 billion), machinery ($26.5 billion), and electronics ($20.7 billion).

South Korea imported %127.8 billion to the US in 2024, up 10.5% from 2023. US imports to South Korea totaled $135.5 billion. The two nations have an estimated $7.7 trade deficit. The top US imports were vehicles ($45.4 billion), machinery ($26.5 billion), and electronics ($20.7 billion).

Note that autos/vehicles account for a substantial portion of US trade with South Korea and Japan. China’s auto sector has been rapidly expanding. The government has been providing mass subsidies to manufacturers and China already has the materials needed to create vehicles without any reliance on the US or West.

Technology was reportedly in the spotlight during discussions. China is willing to import semiconductor raw materials to Japan and South Korea. Japan and South Korea are willing to sell chip products to China.

Now the RCEP was expected to add $186 billion to the global economy before the US announced tariffs. Again, this alliance accounts for 30% of the global population. China’s middle class continues to grow and nations are now realizing that there are buyers outside the US. America will lose its spot as the financial capital of the world to China, as the computer has been predicting, once the world begins lining up to sell goods to China instead.