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00:00Good to have you with us on the show today. It does seem like this summit has been heavy on
00:04optics, symbolism. Has anything really been achieved substantially?
00:10I think that, as with many things, but certainly these types of events,
00:16the symbolism is probably the product. And what's quite interesting is for all the ways in which
00:24the Trump administration, President Trump, especially in this second term, have really
00:30broken norms domestically and internationally. This particular trip looks very classical,
00:38almost like it could have been any other president's trip to China.
00:45Interesting that we heard from Jameson Greer that a lot has been achieved in terms of a
00:51rebalancing of trade between the two countries. Is this a new norm? I mean,
00:55it's not about expansion of trade, it's rebalancing, trying to recover what's been lost.
01:01I think what is interesting is a lot of people don't fully appreciate when the Trump administration
01:09talks about rebalance when it comes to trade. It is another way of saying that they are looking
01:17to create new winners and losers, different winners and losers from a longstanding policy
01:25here on trade. So I know they always point to the trade deficit, and that is one indicator,
01:33a very easily understandable indicator, usually represented by a single number.
01:38But when I hear Ambassador Greer talk about the need to rebalance trade between the United States
01:44and China, I appreciate that he's talking about more than just the trade volumes. He's talking
01:51about the trade volumes, but more than just the trade volumes. And I think that that is actually
01:56a really important standard to be applying to this summit and whatever outcomes may be coming from it
02:04when it comes to trade. At first glance, it does not look like from the symbolism around the
02:10Trumpet, to the personnel that are brought onto the summit, to the private sector delegation that is
02:17accompanying the president to this summit. It does not look like a real rebalance is happening. If
02:24anything, this looks like more of the same and maybe even a more extreme version of what came before
02:32Trump in terms of the U.S.-China trade relationship.
02:38Should you be talking about winners and losers when what's been agreed upon back in Busan have not
02:44even been fulfilled? If you take a look at the commitment from China to buy 25 metric tons,
02:50million metric tons of soybeans, that has yet to be fulfilled. How do you talk about winners and
02:55losers at this stage?
02:57I think that's a really good question. And let's talk about who's winning and who's losing.
03:03When you look at the soybean trade, I think American soybean farmers are going through an
03:10enormous amount of anxiety in this year. Not only is the trade with China uncertain and a point of
03:19anxiety, there's been special deals cut with Argentinian farmers, the big Argentina bailout that
03:26has come at the expense of American commodity farmers. There is also the overall challenge that
03:34we have in terms of rising prices in the United States and then the challenges with access to
03:40fertilizer supplies. So it's one thing to look at a particular metric when it comes to a dollar amount
03:49for what China may or may not be committed to purchasing, whether or not they purchase it.
03:54It's another thing to put those numbers into the context of what is happening in the U.S. economy
04:01and what is happening for the actual producers, consumers and workers in this economy. You wouldn't know
04:08by watching the footage and watching and listening to the talking points coming out of this summit that
04:15the U.S. economy for ordinary middle class people is going through a significant amount of disturbance
04:24and turmoil today.
04:29Ambassador Tai, you can't help but look at the numbers. I mean, just a deal to do with those Boeing
04:34jets 200 when, you know, the market was actually looking at 500. It's also a far cry from the big
04:42patches that was made back in 2017 when Trump was lost in town. That was 300 jets. I mean,
04:49how are you reading all these numbers and the kind of commitment perhaps China may or may not be
04:55showing in terms of trade with the U.S.? I think that this is a very obvious performance that is
05:03going
05:03on on both sides, on the U.S. side and the Chinese side taking place on the stage in Beijing.
05:09In terms
05:10of those Boeing purchases, China has owed Boeing purchases going all the way back to 2020 and that
05:19first phase one agreement that was inked between the Trump administration, its first term, and China.
05:28those purchases have been held in abeyance for these past six years. And when you look at that context
05:37then, set aside the expectations around and the comparisons to the number of jets that were purchased
05:43before. But if you look at the number of jets that haven't been purchased, that 150 number looks
05:50terrifically modest today. It's not just about soybeans and jets. It's also about chips. We know
06:01that the addition of NVIDIA CEO Jensen Huang came pretty last minute. We also know that the U.S. has
06:07greenlit H-200 chips. I mean, how are you reading that, bearing in mind that, you know, the U.S.
06:15has
06:15talked about national security, and here it is, greenlighting the H-200. How do you square that?
06:23I'm not sure how they square it. And it's the job of this administration and the leaders in terms
06:30of economic policy, national security policy, foreign policy, to square that. It is very unclear to me
06:38as an outsider watching the signals what the principles are that this administration is pursuing
06:46on behalf of the United States in navigating this enormously consequential but complicated and
06:53difficult relationship with the People's Republic of China. There is clearly a need for a reset in terms
07:05of the relationship. I think that the overall tone of doing deals, deals, deals, and these very,
07:13very wealthy CEOs going on this trip to Beijing really undermines any message that this administration
07:24has put out there around the hard realities and the hard truths that need to be spoken between
07:32Washington and Beijing. What's also interesting is the fact that despite the U.S. greenlighting the
07:41chips, China ain't buying. I mean, it speaks to the deep distrust, doesn't it? It does. It speaks to deep
07:49distrust. It speaks to a growing dysfunction in this relationship, which I agree is imbalanced. The
07:58People's Republic of China is the world's largest producer and manufacturer and exporter of goods.
08:04The United States is the world's largest importer and consumer of goods. When you look at this
08:11particular relationship, you see the degree of distortion and mutual reliance that these two
08:18economies have on each other. It is driving a very significant economic unhealthiness and
08:27different political disturbance here domestically in the United States. And I don't see any of those
08:34issues on the table being taken up in these conversations with China.
08:43Do you see further decoupling within the U.S. and China, especially in technology? And is
08:50that decoupling perhaps irreversible now? You know, it's really hard to say
08:57whether I see it or not. Again, going back to the lack of clarity around the principles
09:03driving this relationship for this administration, I did hear in the clip the piece about the Board of
09:12Trade being about U.S.-China conversation around the goods that the United States wants to sell to
09:19China. I did not hear Ambassador Greer include chips in his list of products. And yet, and yet there are
09:28at least two big semiconductor company CEOs on this particular trip trying to sell their product to
09:36the Chinese. And we know that U.S. chips are being used as a leverage for the U.S. If
09:45the Chinese
09:46refuses, continue to refuse to buy the H-200, do you think the U.S. runs the risk of losing
09:53this leverage?
09:57I don't know. I mean, I think there's the H-200 trips, right? There's the AI chips. Interesting to
10:06see that other than Elon Musk, none of the the AI CEOs are on this trip. And part of that
10:14is because
10:14the AI company CEOs are driving a narrative that they need to receive all of the benefits from the
10:22U.S. government and the U.S. taxpayer in order to out-compete China. There are a lot of, when
10:29you
10:29look at the actual signals that are coming out of these few days in Beijing, there's not a clear
10:38signal that comes out for discerning people like your Bloomberg viewers. And I don't know what to
10:44make of this. And another thing that's not clear is actually rare earths. We've seen China weaponize
10:54rare earths, you know, sending the U.S. to its knees when it withheld those supplies. I'm just
11:00wondering, do you see China doing that again? That is a tremendous leverage point of holding
11:06a choke point in the global economy in a critical area that is affecting so many relevant and upcoming
11:15technologies and industries. There is no reason why China would give up that particular leverage
11:22from my point of view.
11:26And what can the U.S. do? The U.S. has talked about perhaps, you know, producing its own 100
11:32,000
11:33batteries annually, which is half of what the world needs in three years. Is that even realistic?
11:39I mean, what is the path forward for rare earths for the U.S.?
11:43I think it's going to be really hard. We, the United States and the rest of the world,
11:47have allowed for China to develop this completely dominant position in the global market on rare
11:55earths. And it's not that it's a problem that caught us by surprise. In fact, in the early
12:022010s, when I was at USTR the first time around as the chief counsel for China trade enforcement,
12:09I led a team that litigated a WTO case that's at the World Trade Organization against China on export
12:16restrictions the Chinese had placed on rare earths. We won that case. But looking back, we clearly won
12:25the battle but are losing the overall struggle. Because today, the United States and similarly
12:32situated countries in the rest of the world are actually worse off when it comes to access to
12:40Chinese rare earths or rare earths in general. And I think a really important aspect of this, which speaks
12:48to the larger challenge of trade relations with China for the United States and for much of the rest of
12:54the
12:54world, is that this version of globalization, of trade liberalization that we have been pursuing for
13:01the last 45 years, has resulted in massive concentration and consolidation, not just in rare earths,
13:10but across multiple really strategic sectors. China now holds as choke points. And for the rest of us,
13:18then, the question is, what are the hard truths, the hard conversations we need to have with ourselves
13:23and with Beijing in order to evolve our situation so that we can turn down the dial on geopolitical
13:33temperatures and pressures so that there can be more resilience and more supply chains that run through
13:40more parts of the world? And I think I see evidence of some of that work coming from the Trump
13:49administration. It is entirely unclear to me whether any of that is being taken up in these conversations.
13:57Do you see a different China? Is this a China that's more confident because it is dominant
14:04in the space of rare earths? Again, not just rare earths, right? Solar panels that we've seen over
14:12time, EVs and EV batteries. I think this goes to a diagnosis that had become very, very clear,
14:20certainly at the end of the Biden administration, which is around the over buildup of capacity in China,
14:29in all kinds of manufacturing sectors. And the linking of the reality today that China is responding to
14:38its own economic challenges by doubling down on its dominance as a manufacturer, threatening
14:45a second China shock for the United States and the rest of the world with all of the concomitant
14:51challenges to jobs, to communities, to industries, and to domestic politics. And what I find very
15:01interesting is that with all of the rhetorical talk that members of the Trump administration will parrot
15:11around advancing economic and trade policies in favor of the working person and working class,
15:19none of that is on display and very little of that conversation around the China shock that is
15:26here in its second iteration, or the need to respond to this doubling down in terms of China's export
15:37dominance. None of that has really been in the mainstream conversation. And my fear is that none of
15:43that is actually being addressed in Beijing at this opportunity between the two leaders.
15:54Ambassador Tai, I also want to touch on the 301 tariffs. What's the status of those tariffs?
15:59Are they indeed undermining U.S. competitiveness?
16:06Let me answer the first part of your question first, which is there are a lot of 301 tariffs.
16:12They're the ones that were applied in 2018. Those were the ones that were China facing.
16:19There have been 76 301 investigations that USTR initiated about two months ago in the middle of
16:28March, about two weeks after the IEPA tariffs were declared unconstitutional and the Section 122
16:36tariffs were put in their place. My expectation is that these investigations will probably wrap up
16:42with remedies announced in time for the Section 122 tariffs to either expire at the end of July or to
16:50be declared potentially unconstitutional again by the U.S. court system. When it comes to those new 301
16:59tariffs, again, there are 76 investigations that are looking at 60 different trading partners. China is
17:07facing two sets of investigations, one for the overcapacity in manufacturing sectors and the second one for
17:17failing to have a forced labor import ban. I think that in the conversation with Ambassador Greer,
17:23the question about what should happen if those investigations turn into tariffs and whether or
17:29not that will implicate the Busan truce, I think you saw Ambassador Greer really be restrained in his
17:37response. But my reading between the lines is that inevitably, should those investigations come out
17:44and manifest new tariffs that are directed at China, that those absolutely will impact the
17:51Busan truce and the dynamics going into any potential fall return state visit.
18:00How about in terms of how perhaps the 301 tariffs are making the U.S. less competitive? I mean,
18:07it does add to import costs, especially manufacturing and AI. What's your take on that?
18:13I don't know how you separate 301 tariffs from the IEPA tariffs from the 232 tariffs. We are living in
18:20a
18:20very, very heavy tariff environment. And as a former trade representative and someone who has made my
18:29way in the world really focused on trade policy, the tariff for me is just a tool to accomplish an
18:36objective. And I think that the question for the United States under the second Trump term today
18:43is what are all of these tariffs supposed to be accomplishing? And that also is not clear to me.
18:55Ambassador Tai, just one final question. And in 30 seconds before we wrap it up,
18:59I'm just wondering what's the biggest risk out there in terms of relations between the U.S. and China right
19:03now?
19:04What keeps you up at night?
19:08My concern is that this administration fails to deliver on a coherent policy with clear principles
19:19that are key to learning lessons from the past. We cannot afford to keep making the same mistakes
19:28over and over and over. The mistakes that we've made in the past have led us to today,
19:34which is a less peaceful, less and potentially less prosperous world.
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