North Korea's strong response to recent U.S.-South Korean military exercises reflects a test of Pyongyang's new calibrated escalation capabilities, and may represent a lasting shift in North Korea's coercive strategy. As we noted in February, North Korea's recent focus on short-range conventional weapons systems will ''provide Pyongyang with more ways to manage its political and security needs by enabling North Korea to increase pressure on adversaries in ways far less likely to trigger a full-scale war.'' It appears North Korea is growing more confident in its ability to manage escalation, meaning Pyongyang will likely take more aggressive actions to dissuade South Korea-U.S. defense exercises and reshape its own security environment.