Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: It is the most talked about book right now across
Speaker 2: the Transatlantic Sami Keynes is wonderful at the Financial Times,
Speaker 2: and she's teamed up with Adam Polson's crew at the
Speaker 2: Peterson Institute. Chad Bound joins us. Chad has thought harder
Speaker 2: about American trade over the last two or three decades,
Speaker 2: and anyone I know. The book is How to Win
Speaker 2: a Trade War? And because you know, Chad wanted to
Speaker 2: do eight hundred pages, and Somia said, are you kidding me?
Speaker 2: It's readable, it's approachable, it's airplane ready. How to Win
Speaker 2: a Trade War? This isn't the trade economics Chad of
Speaker 2: when you were a youngster at Bucknell, isn't it. What
Speaker 2: does the new trade war look like?
Speaker 1: Well, the new trade first, thanks, it's great to see you, Tom.
Speaker 1: The new world is all about trade wars and the
Speaker 1: world has fundamentally changed. Right We used to say, I,
Speaker 1: as an economist, used to say, nobody wins from a
Speaker 1: trade war, so you shouldn't even fight it. Well, unfortunately,
Speaker 1: that's not the world that we are living in right now.
Speaker 1: We have to fight the trade war. President Trump likes
Speaker 1: to use tariffs in the trade war. So that's one
Speaker 1: thing that you have to use. But I think what
Speaker 1: we try to do in this book, and you're right,
Speaker 1: it is an airplane read, but it's not even a
Speaker 1: transatlantic airplane read. You can get it, you know, much
Speaker 1: a couple of hours right. Figure out what's going on here.
Speaker 1: It's about much more than tariffs. It's about stockpiling, it's
Speaker 1: about using subsidies, it's about export restrictions. All these stuff
Speaker 1: now making the headlines when.
Speaker 2: William Klein and the team, the old sters at Peterson
Speaker 2: Institute are thinking about this. We were giving textiles away
Speaker 2: from the Carolinas to China. The distrust in America about
Speaker 2: the labor component is tangible. How do we get the
Speaker 2: trust of American labor back to do.
Speaker 1: Trade well, I think the first thing that we have
Speaker 1: to do is you have to be honest with them
Speaker 1: about what the underlying problems are. Right. And yes, some
Speaker 1: of the problems was the speed of the shock that
Speaker 1: the United States faced with all these imports from China.
Speaker 1: But that's sort of the old trade war. That was
Speaker 1: the thing that we could have maybe should have dealt
Speaker 1: with twenty years ago. But that's not the trade war
Speaker 1: that we need to be fighting today. And so the
Speaker 1: first lesson of the book is fight the right trade war.
Speaker 1: The right trade war today is recognizing that China is
Speaker 1: playing a fundamentally different game than the United States and
Speaker 1: every other major Western economy out there. China wants a
Speaker 1: world where the world outside of China is dependent on
Speaker 1: China for its supply chains. But China doesn't want to
Speaker 1: be dependent on the rest of the world for its
Speaker 1: supply chains, So that lack of interdependence, right, China wanting
Speaker 1: the rest of the world to be dependent on it
Speaker 1: so that it can weaponize it sometimes as we saw
Speaker 1: last year with rare earths, permanent magnets, that Nexpiria semiconductor story.
Speaker 1: I think we have to be honest with the American
Speaker 1: people that this is a trade war, or that actually
Speaker 1: we do have to fight. It may be different from
Speaker 1: what they thought, but it's the important sort of level
Speaker 1: set to getting mistakes right.
Speaker 3: Chad, I think I'm probably like most of our listeners
Speaker 3: and viewers. I didn't even think about logistics and trade
Speaker 3: and all that kind of stuff. Stuff just kind of
Speaker 3: showed up on the shelves, and then the pandemic happened.
Speaker 3: Then then we're like, oh, yeah, now I get it. We
Speaker 3: need to pay attention to this stuff. Did we need
Speaker 3: tariffs and that tariff policy to achieve maybe some of
Speaker 3: our strategic goals of onshoing or near shoring.
Speaker 1: So what we argue in the book is that tariffs
Speaker 1: aren't a part of a part of the story. But really,
Speaker 1: I think where the United States has not quite gotten
Speaker 1: it right so far is the breadth of the tariffs.
Speaker 1: You certainly don't need to have them on all products,
Speaker 1: so strategically use them and the countries with which you
Speaker 1: apply the tariffs. So if you're thinking about what's the problem, right, well,
Speaker 1: we've got excessive concentration of production of certain goods, essential
Speaker 1: product the American manufacturing needs, American consumers need, and it's
Speaker 1: all in China. Well then it might make sense to
Speaker 1: use tariffs. It's part of some other policies against China.
Speaker 1: But you don't simultaneously need to impose those tariffs on
Speaker 1: Europe in Japan, especially if you want those other friends
Speaker 1: and partners to be working with you, because then you've
Speaker 1: got them fighting a trade war, a two front trade war,
Speaker 1: dealing with China, but then also having to deal with
Speaker 1: you the United States, at the same time.
Speaker 2: Shed bing with This is the hottest book in economics
Speaker 2: right now? How do win a trade war? Can't say
Speaker 2: enough about it. We're going to continue here in Optimistic
Speaker 2: Guide to an Anxious Global Economy, Chad, I got two
Speaker 2: ways to go here on your back, blurbs. You've got
Speaker 2: my book of the summer two three years ago, Chip
Speaker 2: Wars by Chris Miller of Tufts and the basic idea
Speaker 2: of technology semiconductors and such. How do we prosecute a
Speaker 2: trade war wrapped around the technology of Taiwan and Korea?
Speaker 1: Yeah, well, that's that I think an important part of
Speaker 1: the trade war story here, and I think there's at
Speaker 1: least two different pieces of that that we have to confront.
Speaker 1: One is and you're right, Chris's book is amazing. The
Speaker 1: first is dealing with the challenge of Taiwan. Right, So
Speaker 1: it is a little bit worrying that ninety plus percent
Speaker 1: of global production of leading edge chips takes place in
Speaker 1: one location, right, it's not China, China, So it's not
Speaker 1: the same sort of problem as you know, are they
Speaker 1: going to weaponize it against us? But having it all
Speaker 1: there in a world that suffers from floods, earthquakes. Not good.
Speaker 1: We've got to diversify. How do you do that? Industrial
Speaker 1: policy a little bit, but it's got to be smarter
Speaker 1: than the way we've done industrial policy in the past.
Speaker 1: You've got to think about demand, what the United States
Speaker 1: did with the Chips Act. But you also sorry supply,
Speaker 1: but you also have to worry about demand. What we
Speaker 1: didn't do necessarily with the Chips Act. All these fabs
Speaker 1: in the United States. Great, we've got the production capacity now,
Speaker 1: but why isn't it that in Nvidia and you know,
Speaker 1: AMD and all the chip design companies want to use
Speaker 1: them yet, Right, We've got to create some other incentives
Speaker 1: there too. But then the second part is the AI
Speaker 1: challenge with China and this race, right, and the use
Speaker 1: of export restrictions and balancing those in the appropriate way
Speaker 1: to make sure that the American side of this story
Speaker 1: does end up.
Speaker 2: Okay, I gotta squeeze this in. This is important, folks.
Speaker 2: I mean, he's doing this tour with Samike knes Paul.
Speaker 2: She shows up with a ukulele. I mean she's playing
Speaker 2: ukulele at their book shows.
Speaker 1: Nice, it's too much.
Speaker 2: Chad's like, you know, a wallpaper. He's like hanging out, Chad.
Speaker 2: Nobody knows that you're the heritage of Fred Bergston, who
Speaker 2: is hugely supportive to my act, to Peter Peterson, who
Speaker 2: is hugely supportive of my act, and Adam Posen, who's
Speaker 2: a bigger Red Sox fan than I am. Does your
Speaker 2: shop the Peterson Institute after your book The Trade War?
Speaker 2: Think we nudge back to the Washington consensus.
Speaker 1: The beauty of the Peterson Institute where I work is
Speaker 1: there is no institutional line. Everybody has their own views,
Speaker 1: that does their own analysis, comes up with their own perspective.
Speaker 1: So I will leave it to my boss, Adam Posen,
Speaker 1: to give his own views. But I agree. You know,
Speaker 1: we're going to have these debates about what's the right
Speaker 1: way to tackle these sorts of problems, and it's great
Speaker 1: that we're doing so. And I'm just super glad to
Speaker 1: be able to bring not a ukulele but a copy
Speaker 1: of the book and to show it here on your show.
Speaker 1: Thanks for having me, Tom.
Speaker 2: John Tucker's going to have a ukulele next time. The
Speaker 2: book is How to Win a Trade War. Airplane reading
Speaker 2: even not trans atlantic to Richmond, New York to Richmond.
Speaker 2: Pretty good, to say the least. I can't say enough
Speaker 2: about this. A lot of other people are on board
Speaker 2: what Canes and Bone have done to really bring us
Speaker 2: up to date on a lot going on in trade.