Ben Morgan’s Pacific Update: US tariffs – This week’s big story

Last weekend, President Trump announced big tariffs on imports into the US from China, Canada and Mexico. He also indicated other countries would suffer similar treatment, including the European Union. The tariffs are not unexpected, the new president has signaled that they would become part of his foreign policy.

However their size, 25% on all imports from Mexico and Canada (except Canadian oil) and 10% on all Chinese imports, and suddenness are a surprise. China, Canada and Mexico all responded with their own tariffs initiating a situation the Wall Street Journal called the ‘dumbest trade war in history.’

The furore created by this discussion is intense and most economists believe the proposed tariffs will damage both the US and world economies. Then on 4 February, the president backtracked announcing a one month extension on Mexican and Canadian tariffs taking effect.

What are some possible security implications for the Pacific?

The president’s unpredictable policies create economic uncertainty, damaging international business confidence. Security and stability are closely linked to economic prosperity because poverty and deprivation can be breeding ground for violence.

The South West Pacific is an area with small economies, youthful demographics and weak state institutions. Any slow down in the global economy will impact more in places like Solomon Islands, Papua New Guinea or Timor Leste than in larger economies in the Americas or the North West Pacific. An economic down turn reduces income that can create social tensions, as communities become divided based on wealth. Around the world, young people world are already struggling economically post- COVID 19, facing high inflation and have less personal wealth to buffer them so would be more impacted by an economic downturn.

This means they are more likely to become angry or disillusioned and engage in criminal activity or violent political movements. In countries with a high proportion of young people, and weak state institutions this could undermine social cohesion and create security issues.

Social stability of small South West Pacific nations may seem like a minor consideration in US strategy, until the wider strategic situation in the Pacific is reviewed. The US is currently focused on competition with China, that may culminate in kinetic war-fighting. Therefore, it wants to secure multiple logistics chains into the East and South China Seas. The first chain is from the mainland US to Hawaii and from there to Japan, Philippines or South Korea.

However, this chain is easily interdicted, so the US is also developing a second chain that starts in Australia, a logistic route that will be familiar to students of World War Two’s Pacific campaign. This route requires a secure Melanesia, and explains why China is so diplomatically interested in places like Solomon Islands.

An economic policy that de-stabilises countries in this region is unlikely to benefit wider US strategy in the Pacific, especially when the new administration has frozen US AID funding. Essentially, the region could suffer two significant economic blows that some countries are not strong enough to weather, so are therefore likely to seek aid from China reducing US influence in the region.

The second noteworthy point relates to trust and confidence, factors upon which the current rules based order is predicated and that underpin future US alliances. The sudden imposition of high tariffs on Canada, historically a staunch US ally undermines a long standing relationship. It is likely to make other US allies and partners concerned about their position and relationship with the US.

Some people will argue that it forces US allies and security partners to ‘pull their weight,’ often citing the threat of a Trump presidency being the reason that NATO countries have recently increased defence spending, and their aid to Ukraine. At NATO’s recent Baltic summit Finnish president, Alexander Stubb made a case for increased European defence spending stating that Europe’s “holiday from history is now over.” Stubb is a clever and articulate statesman, and it is only since the Russian invasion of Ukraine, and the prospect of a Trump presidency that European nations are increasing defence commitments.

However, the other side of this coin is an inevitable uncertainty created by this decision. Around the globe US allies and partners will be concerned about – What comes next? If the new regime can sanction a long standing ally like Canada, what can other countries expect? For example, this week New Zealand media discussed the risk of US tariffs being imposed to punish the country for its low defence budget, and similar concerns are likely to be expressed in other US aligned nations.

Meanwhile, on 30 January, new US Secretary of Defence, Peter Hegseth made his first official calls to South Korea and Japan. The timing indicates how important these relationships, and the Pacific are to the new administration. But, we can be sure that diplomats and politicians in both countries will be studying the Canadian tariffs and wondering if their country will be next, and if the US can be trusted as an ally.

My third key observation is that these tariffs carry another strategic risk for the US because they may drive other nations into establishing financial structures based on Chinese institutions rather than existing American ones. Undermining the current US-led rules based order and the stability it provides. For example, part of China’s response to tariffs is to stop importing soya beans from the US. Now they will buy soya beans from Russia, this brings Russia closer to China and gives it valuable foreign exchange. And, if the policy of economic isolationism and tariffs continues this activity is likely to increase as countries like China, Brazil, Russia, South Africa and Saudi Arabia choose to work more closely together, rather than with the US. A trend that risks creating the exact anti-US global financial order required to strategically defeat the US.

In assessing this action, I am trying understand the new administration’s objectives and my theory is that the activity is a long-term plan to force US companies to return to manufacturing in the US. The Ukraine War demonstrated the strategic weakness of outsourcing manufacturing. NATO’s defence industrial base tends to be multinational, investing heavily in technology and has a ‘just-in-time’ production model. This means NATO countries, including the US are struggling to rapidly increase production of basic military equipment like ammunition. Additionally, COVID 19’s impact on global supply chains also demonstrated the potential weakness of globally interdependent, outsourced manufacturing. Trump’s plan appears to be using the tariff regime as a response to these concerns, trying to rebuild a US industrial manufacturing base.

But whether, this is the best option to achieve the goal remains to be seen. In my opinion, if this policy continues it is more likely to increase instability, diminish the strength of US alliances and speed up the creation of an alternative power block that is powerful enough to directly oppose the US, economically and militarily. A situation that is liable to have profound security risks in the Pacific region.

New Chinese drone carrier, and an un-crewed ship launched

In May 2024 year, military commentator H.I. Sutton identified a ship being built deep inland, at a Yangtze River shipyard, suggesting that it may be a new Chinese ‘drone carrier.’

Recently, China officially announced it has launched two interesting new vessels. The first is the size of a small aircraft carrier or amphibious ship, and has a full-length flight deck and appears to have a floodable well-deck at the rear. The second is a smaller multi-hull Un-crewed Surface Vessel (USV) that is designed to operate with our without a crew. It is small about 300 tons and has a flight deck that is probably for drones.

The USV is too small to support large drones, but the drone carrier’s size and flight deck indicates it could operate medium-sized drones. Probably the Chengdu GJ-1 roughly equivalent to the US Predator. The Chengdu GJ-1 has an operational radius of about 2000km, excellent surveillance systems and can carry up to 200kg of bombs or missiles. Normally, a war load of four AKD -10 guided missiles, China’s equivalent to the US Hellfire. A drone carrier operating these aircraft provides a range of strike and surveillance options either within a conventional task force or operating independently supporting littoral operations.

Further, the ship’s well-deck provides the ability to launch un-crewed surface or submersible drones. Sea drones providing more surveillance and strike options. The new vessels is currently registered under a commercial entity so is likely to be used for experimental activities. This ship will provide a opportunity to test how a air and sea drones could be used within a task group to monitor large areas of land or sea, locating targets for more powerfully armed crewed aircraft to attack. Perhaps, even using drone fired missiles to suppress enemy air defences.

During hybrid operations a drone carrier could also provide useful capabilities with less threat of escalation than a conventional warship. For instance, a drone carrier could support a proxy’s campaigns in a less escalatory manner than a conventional warship.

The USV is designed to operate drones, and it is easy to envisage a role for it conducting high-risk long-range surveillance and strike operations. Perhaps using drones to either increase its attack range, or to guide missiles to a target. A USV also potentially provides a vessel able to stay on station, monitoring or blockading an area for longer than a crewed vessel could.

The launch of these vessels is a signal about how naval war is evolving, and it is a development worth noting as countries around the Pacific increase naval spending because vessels like these may develop into a cheaper and more effective means to dominate large areas of ocean than traditional warships. Further, it is easy to see how effective small, multi-role drone carriers can support littoral operations including; amphibious operations or supporting law enforcement.

Russian aircraft intercepted near Japan

On 23 January, two Russian Tu-95 ‘Bear’ long-range bombers and a pair of fighter planes entered Japan’s Air Defence Identification Zone (ADIZ). The Russian planes carried out an eight hour patrol over the Sea of Okhotsk and Sea of Japan. At the same time, a Russian Il-38 ‘Dolphin’ maritime patrol aircraft conducted a mission near the Sakhalin Islands.

The Tu-95 ‘Bear’ is Russia’s equivalent of the B-52, a large 1950’s era bomber still in service because its large size, long range and robustness mean it can modernised and used in wide variety of roles. In this case, probably packed with a range of electronic listening devices furiously collecting data about Japan’s air defences. The Il-38 ‘Dolphin,’ is a maritime patrol aircraft roughly equivalent to the US P-3 Orion and as well as testing the air defence network it is probably gathering intelligence

Although Japan responds to hundreds of incursions annually, the activity is noteworthy because it is a good example of Russia testing Japan’s response and resolve. The ADIZ is a convention used by many nations to allow for identification of aircraft operating near their airspace. The US, Canada, China, Taiwan and a range of other countries operate ADIZs, that help defuse tension in contested areas by ensuring that aircraft are easily identified before they become a threat.

By crossing into Japan’s ADIZ Russian planes force a response, and this provides intelligence data. For example; How fast does Japan respond? What type of aircraft respond? Where from? Does the radio traffic provide clues about the Japanese response?

This activity over the cold northern waters of the Pacific reminds us that even though Russia is bogged down in Ukraine, it still has the military resources to conduct intelligence gathering by testing Japan’s defences.

Melanesian update

A regular update on the Pacific’s least reported trouble spot; Melanesia.

Cyber infrastructure – Vanuatu earthquake a useful case study

In December last year a large earthquake struck Vanuatu, causing considerable damage. It exposed how vulnerable the nation’s digital infra-structure is to either natural disasters or human intervention. The earthquake started a fire at the cable’s landing station that shut down terrestrial internet access to the island for ten days.

Redundancy of digital infrastructure is a key security issue within the South West Pacific, a region consisting of small, widely separated nations. It is also a region facing a range of security issues, and that sits on the Pacific’s volatile ‘ring of fire’ so suffers frequent earthquakes and volcanic activity. Tonga provides another example of this weakness, in 2022, when a volcanic eruption disrupted internet connections to the island, and across the wider Pacific.

Digital infrastructure is a security issue because it provides access to digital communications during emergencies. Whether the emergency is a natural disaster or a security incident. The limited number of submarine cables also makes these nations vulnerable to hybrid attacks, like ships ‘accidently’ cutting cables. A tactic we saw in the Baltic Sea last year, and that would have a major economic impact on a small nation.

However, developing more digital infrastructure is difficult because many small Pacific countries struggle to raise the capital need to fund projects. For instance, Vanuatu has been advocating for a new cable since 2018, but has not found a partner yet. The US and Australia are investing in submarine cables linking Vanuatu, Papua New Guinea and Solomon Islands, especially as China becomes more active in the area. Google is also building network of Pacific cables, however providing access to good digital connectivity is a good option for nations trying to use diplomatic ‘soft power’ in the region.