Speaker 1: Hello, this is COI Time, a podcast series on markets
Speaker 1: and economies from DBS Group Research. I'm Tammu Wei, chief economist,
Speaker 1: welcoming you to our 146th episode. Today, it's all about
Speaker 1: trade policy. We welcome back to the show Dr. Deborah Elms,
Speaker 1: head of trade policy at the Heinrich Foundation in Singapore.
Speaker 1: Prior to joining the Foundation, Deborah was the executive director
Speaker 1: and founder of the Asian Trade Center.
Speaker 1: She was also president of the Asia Business Trade Association
Speaker 1: and the board of director of the Asian Trade Center Foundation.
Speaker 1: Deborah Elms, great to have you back on COI time.
Speaker 2: Thank you. And can I just say what an amazing
Speaker 2: achievement it is to have 146 episodes under your belt.
Speaker 1: Uh, those 146 episodes stand on the back of illuminas
Speaker 1: like you. So thanks for your support, Deborah. Thank you. Uh,
Speaker 1: let's start with an assessment of US trade policy of
Speaker 1: the last 8 years.
Speaker 1: Did the narrative shift from Trump to Biden, or has
Speaker 1: it really been a single bipartisan threat of rising protectionism?
Speaker 2: I think there were signs of change happening even before
Speaker 2: Trump won.
Speaker 2: Uh, that came into office. And in fact, if you
Speaker 2: start looking back through 2010, 2011, Tea Party efforts in
Speaker 2: the US under the Republican Party, you still see, you,
Speaker 2: you begin to see really strong strains of what is
Speaker 2: now sort of called Trumpism, but they started back even
Speaker 2: before he, he made it into office. However, he has
Speaker 2: changed the narrative. He changed the narrative in his first term.
Speaker 2: From an acceptance of open trade, open markets, globalization more broadly,
Speaker 2: the US as part of an important network of all
Speaker 2: of alliances, um,
Speaker 2: Both for security and economic reasons, for raising living standards,
Speaker 2: reducing poverty, all kinds of things. Trump changed that narrative,
Speaker 2: and he changed it in a way that I think
Speaker 2: is durable and probably lasting, uh, particularly around the difficulties
Speaker 2: of keeping trade open.
Speaker 2: And so I think that narrative shift, which again was
Speaker 2: building up over time, really reached a tipping point, if
Speaker 2: you will, under Trump one, and it maintained um mostly
Speaker 2: intact through Biden and of course with Trump and again,
Speaker 2: we're pushing the boundary of even further in this new protectionist,
Speaker 2: isolationist America first law of the jungle kind of direction.
Speaker 1: I mean, I remember even back in the 80s and 90s,
Speaker 1: you know, Buy American movement was there with trucks that,
Speaker 1: you know, you bought Ford and you didn't buy Toyota.
Speaker 1: But then Toyota started getting made in the US, and
Speaker 1: I don't think people think of a Toyota truck as
Speaker 1: a Japanese truck per se, but I saw salvos of that,
Speaker 1: and of course I'm sure you know, and I always
Speaker 1: like to point it out to people that even the
Speaker 1: young Trump back in 1987 took a full page ad
Speaker 1: criticizing Reagan for being too nice to the Japanese on
Speaker 1: the trade front.
Speaker 2: Yeah, I remember those days quite vividly because I was
Speaker 2: at the time, obviously much younger and, you know, and
Speaker 2: a student going through the process of studying trade, and
Speaker 2: from my perspective, I also looked at US Japan disputes
Speaker 2: at the time.
Speaker 2: If you were to flash forward, many of Trump's specific
Speaker 2: complaints about China look exactly like Trump's specific complaints about
Speaker 2: Japan in the 80s and 90s. And I, I always
Speaker 2: sort of laughed in the first Trump administration, my dissertation
Speaker 2: was on this tool called Section 301 on unfair trade.
Speaker 2: And when I finished my dissertation, I thought, well, you know,
Speaker 2: I mean, it was an interesting thing to do, and
Speaker 2: I'm glad that I did it, but ultimately this is
Speaker 2: a pointless piece of research because we're never going to
Speaker 2: see Section 301 again. It's been retired, it's not gonna
Speaker 2: be in use. The United States has declared it's not
Speaker 2: using it, so really, why does it, you know, this
Speaker 2: was a lot of effort for not very much purpose.
Speaker 2: And then when Trump came back, came into power and
Speaker 2: suddenly we were using Section 301.
Speaker 2: I thought, holy cow, I had to dust off my dissertation,
Speaker 2: read up again on what the statute was, why did
Speaker 2: it work, review the whole set of cases. And I thought,
Speaker 2: who would have imagined at the time that I was
Speaker 2: writing this, that I would have to come back to
Speaker 2: this again as a live issue?
Speaker 1: There were you and I were at an event on
Speaker 1: US inauguration just a few days ago, and I remember
Speaker 1: you saying that we should stop saying unprecedented because just
Speaker 1: about everything that is happening is sort of so out
Speaker 1: of the realms of ordinary that it is by definition
Speaker 1: all of these things are a first and we just
Speaker 1: have to get used to this unprecedented stuff happening over
Speaker 1: and over again.
Speaker 1: But let me ask you for a report card. We've had,
Speaker 1: to your point, longer than 8 years of rising protectionism,
Speaker 1: but let's just take the last 8 years. Trump really
Speaker 1: sort of, you know, re-entered the discussion around protectionism. What
Speaker 1: has been the impact of these measures to restrict trade
Speaker 1: and investment? Has the US gained jobs and investment? Has
Speaker 1: China been hurt materially?
Speaker 2: Uh, I think if you say, what are the broad
Speaker 2: macro trends, and you would know this better than anyone,
Speaker 2: the broad macro trends look relatively unchanged. I mean, trade
Speaker 2: is at a global trade is at a higher level
Speaker 2: than it was pre-Trump.
Speaker 2: COVID, uh, the challenge we have in a little bit,
Speaker 2: a little bit on the data is, you know, COVID
Speaker 2: made a big difference on trade flows and trade patterns. So,
Speaker 2: COVID plus Trump creates a sort of confusion over what the,
Speaker 2: the information actually shows, but global trade remains intact and robust.
Speaker 2: But what has changed is the patterns of global trade,
Speaker 2: and it hasn't changed completely, but you can see, for example,
Speaker 2: That in the wake of Trump's first term, direct trade
Speaker 2: between China and the United States, especially as shown by
Speaker 2: trade in goods, has fallen off rather dramatically. But at
Speaker 2: the same time, trade in goods from other places into
Speaker 2: the United States has gone up dramatically, and part of
Speaker 2: that is the reshuffling of supply chains to take
Speaker 2: Into account restrictions on trade with the US. Part of
Speaker 2: it is markets and firms that are finding new opportunities.
Speaker 2: You know, absent to crisis, sometimes it's hard for a
Speaker 2: firm to say, this is the moment when I'm gonna
Speaker 2: spend a lot of money and a lot of resources,
Speaker 2: time and effort on new market.
Speaker 2: Exploration, developing my new markets, but in a crisis, then
Speaker 2: you suddenly can say, actually, this is the moment when
Speaker 2: we have to make that investment and look for alternative
Speaker 2: final markets for our products, new suppliers, new distributors, etc.
Speaker 2: and I think that's been happening as well over the
Speaker 2: last 8 years.
Speaker 1: Why was it not possible for the Biden administration to
Speaker 1: make a case for rolling back Trump era tariffs, even
Speaker 1: though inflation was such a big issue in 201, 202?
Speaker 2: Well, that's gonna be one of the many subjects for
Speaker 2: the next PhD dissertation. It's why is it that the
Speaker 2: Democrats have and Biden himself have been so spectacularly unsuccessful
Speaker 2: at explaining why trade and economic openness matters to average Americans. We,
Speaker 2: we just, we have done a terrible job of being pro-trade.
Speaker 2: In general, anyone who's pro-trade done a terrible job of
Speaker 2: explaining why this matters, and it's not just in the US.
Speaker 2: I mean, there is a quote that has, will stick
Speaker 2: with me till I die, that came from the Brexit
Speaker 2: period in which uh uh right after the Brexit vote
Speaker 2: for the UK to leave the European Union, they interviewed
Speaker 2: as
Speaker 2: A worker at a Japanese automaker in the UK that
Speaker 2: sells almost or at least it did at the time,
Speaker 2: sold almost all of their products directly into the European Union.
Speaker 2: And this gentleman, when asked about Brexit, said, What is
Speaker 2: trade to me? I don't own any stocks.
Speaker 2: And I thought, wow, we have lost the plot. When
Speaker 2: a guy who works for a Japanese company in the
Speaker 2: UK that exports all of the products does not see
Speaker 2: that he is a vital part of global trade. And
Speaker 2: so I think that experience is replicated over and over
Speaker 2: and over again, where people experience trade in every hour
Speaker 2: of their day, but they don't know that. They don't
Speaker 2: recognize it. And so that makes it easy for them
Speaker 2: to to to listen to someone who says, I will
Speaker 2: protect your back, I will save you from trade evil.
Speaker 2: And they say fantastic. And then when you say, but
Speaker 2: let's think about what you do and where you do
Speaker 2: it and why you do it, and actually, you know what,
Speaker 2: you need trade, both for your own personal life but
Speaker 2: also for your professional life. Your job depends on trade often.
Speaker 2: That's a hard lesson for people to get.
Speaker 1: Yeah, very much so. I've got to say, I mean,
Speaker 1: I was disappointed, but lately, Deborah, I've been sort of
Speaker 1: reading about the late 1890s when McKinley was imposing all
Speaker 1: those tariffs. I mean, there was this whole period between
Speaker 1: 1892 and 1896 when the Democrats ran against tariffs, wanted
Speaker 1: to roll them back, but failed despite having the House
Speaker 1: and the Senate and grow Cleveland as the president because
Speaker 1: the regulatory.
Speaker 1: Lobbying was so much that whoever was getting protection under
Speaker 1: tariff basically said, All right, you may have run against tariff,
Speaker 1: but not my industry, keep my industry under protection. I'm
Speaker 1: not entirely aware if there was substantial lobbying done by
Speaker 1: American companies um in the Biden administration days to prevent
Speaker 1: Trump era tariffs from being rolled back, but are you
Speaker 1: aware of any such thing?
Speaker 2: Definitely. I mean, this is the problem with tariffs, is
Speaker 2: that it's very concentrated, right? So if you receive a tariff,
Speaker 2: in other words, you receive the protection behind the tariff wall,
Speaker 2: you're very aware of it and you're very delighted by
Speaker 2: that because it means that the competition is much less
Speaker 2: for you. You can charge whatever prices you want within reason,
Speaker 2: of course, but you, you, you have flexibility that you
Speaker 2: wouldn't have if you weren't sheltered behind this tariff wall.
Speaker 2: And so firms fight for that. And, and the most
Speaker 2: classic example, there are many in the US, but one
Speaker 2: classic example in the US is the steel sector. And
Speaker 2: if you look at who pushed hard to keep steel
Speaker 2: and aluminum tariffs through Trump, through Biden, and now into
Speaker 2: Trump too, it's steel and aluminum. And in fact, steel
Speaker 2: and aluminum tariffs, not only are they back on the
Speaker 2: agenda for Trump too, but there is an effort to
Speaker 2: try to raise them.
Speaker 2: Potentially, or to crack down on any kind of of
Speaker 2: assumed subversion of steel and aluminum to ensure that Buy
Speaker 2: American is only for American steel and aluminum, etc. etc.
Speaker 2: And when you do the research, uh, on how much
Speaker 2: does it cost per job saved to save these jobs
Speaker 2: and steel and aluminum, the last time that I saw
Speaker 2: the numbers come through, it was $300 850,000 dollars per
Speaker 2: job saved to keep steel working in the United States.
Speaker 2: So you say, wow, that's an awful lot of money
Speaker 2: that is going to protect uh not very many jobs.
Speaker 2: And it's likely to get even more expensive as you
Speaker 2: go forward in time and you continue to keep this protection.
Speaker 2: But you can imagine just to sort of wrap this up,
Speaker 2: if you're receiving $850,000 per job saved, you will fight
Speaker 2: hard to maintain that protection, because as soon as that
Speaker 2: protection goes away.
Speaker 2: You're then exposed to competitive forces that you may not
Speaker 2: be prepared for. And so the fight is brutal in
Speaker 2: Washington over reducing any kind of existing tariff preferences, even
Speaker 2: in sectors where the United States, for example, doesn't trade.
Speaker 2: It's really hard to get rid of a tariff once
Speaker 2: it's in place.
Speaker 1: Yeah, absolutely. And Deborah, on the issue of jobs, A,
Speaker 1: it is expensive to keep the jobs, but B,
Speaker 1: The US steel sector is not a job intensive industry anymore.
Speaker 1: The employment in the steel industry is like 75% less
Speaker 1: than it was 40 years ago. Production is more or
Speaker 1: less the same, so it has become immensely profitable. You
Speaker 1: could argue that they can actually produce more steel with
Speaker 1: less people and therefore it's more productive. But any favor
Speaker 1: to that industry is basically going to the owner of
Speaker 1: the capital, not necessarily to hundreds of thousands of workers
Speaker 1: because there aren't hundreds of thousands of workers working in
Speaker 1: the steel industry anymore.
Speaker 2: It's crazy actually how upside down policy, particularly from the
Speaker 2: United States, is to protect a relatively small number of
Speaker 2: jobs in manufactured goods, while ignoring, and I think for
Speaker 2: me this is the key second part, while ignoring the
Speaker 2: enormous number of jobs in the United States and most
Speaker 2: developed economies in the services sector.
Speaker 2: So Trump especially, more than anyone I can think of,
Speaker 2: is so fixated on trade and manufactured goods that he
Speaker 2: does not ever talk about trade and services. That's especially
Speaker 2: weird to me because if you think about Trump's own background,
Speaker 2: he is 100% services. His whole background, real estate, travel, tourism,
Speaker 2: golf courses, food and beverage, social clubs, whatever it is,
Speaker 2: those are all services sector jobs, services sector.
Speaker 2: Um, um, positions, and yet he has no interest in services,
Speaker 2: which is most of the jobs and most of the
Speaker 2: economic growth and, and the future for most developed world
Speaker 2: economies is in services.
Speaker 1: Deborah, I just want to add one story on the
Speaker 1: washing machine element because that was one area where we
Speaker 1: saw clear evidence of prices going up after the tariffs
Speaker 1: were imposed. I think the counter from some of the
Speaker 1: people in the Trump camp has been it's nonetheless forced
Speaker 1: LG and others to move some plants.
Speaker 1: To the US and created a few 1000 jobs. But
Speaker 1: I think that is one example where we actually have
Speaker 1: good data on what happens when you put up tariff
Speaker 1: and what what happens when you remove the tariff because
Speaker 1: just I think it was in 2022 or 2023 when
Speaker 1: the Biden administration allowed the tariffs to go down, washing
Speaker 1: machine prices fell for the first time since the tariffs
Speaker 1: were imposed. So this is one tiny example where we
Speaker 1: can see there is a link between tariffs and inflation,
Speaker 1: pretty quick and clear.
Speaker 1: But again, I'm sort of vexed why it was not
Speaker 1: something that was embraced broadly by the Biden administration.
Speaker 2: I can't, I can't really help you there, but I,
Speaker 2: I would say again, like who fought against washing machine
Speaker 2: tariff removal, washing machine companies and companies in the steel
Speaker 2: sector that supplied steel to domestic, potentially domestic washing machine manufacturers.
Speaker 2: And so you end up with protectionist industries supporting other
Speaker 2: protectionist industries in a sort of unholy alliance, I would argue.
Speaker 2: Of of restrictions for the purpose of maintaining those jobs,
Speaker 2: and there is a clear sense from especially the Trump administration,
Speaker 2: but also potentially from the Biden administration with their worker
Speaker 2: centered trade policy, that there is something uniquely valuable about
Speaker 2: a manufacturing job.
Speaker 2: Which is worth supporting. And so I think from the
Speaker 2: Biden side at least, they would say, even if it
Speaker 2: costs us money, even if we have to pay more
Speaker 2: for washing machines, it's worth it because it's important to
Speaker 2: keep manufacturing jobs in the United States and to keep
Speaker 2: those opportunities available for Americans who want to be in manufacturing.
Speaker 2: And so I think that's the, the, the slightly unusual
Speaker 2: orientation that the Biden team had, but the Trump team
Speaker 2: has it as well. And if you look at many
Speaker 2: of the statements across different people in the Trump administration,
Speaker 2: it's quite clear that they see a manufacturing job as
Speaker 2: more valuable than an alternative job, whether you're, I don't know.
Speaker 2: Doing education or you're, you know, in finance or whatever
Speaker 2: it is, you are not as valuable as a as
Speaker 2: an source of employment as a manufactured job.
Speaker 1: Yeah, it's odd because just like Trump, most of those
Speaker 1: people also are very much from the services sector, lawyers
Speaker 1: and techies, but somehow they're all in love with blue
Speaker 1: collar jobs
Speaker 2: in love
Speaker 2: with manufacturing. And if you say to them, do you
Speaker 2: want your son or daughter to be making washing machines,
Speaker 2: to be physically.
Speaker 2: The assembly line, making washing machines, they would say, No,
Speaker 2: I sent my kid to Harvard or Yale or something.
Speaker 2: I don't want my kid to be the one who's
Speaker 2: putting together the, the washing drum with the whatever wiring
Speaker 2: harness or whatever goes into, I don't even know what
Speaker 2: goes into a washing machine. Um, they would say no.
Speaker 2: You know, so it's, it's rare. I mean, I, I,
Speaker 2: my son is in manufacturing, and I will tell you
Speaker 2: that especially among my peers, that's very unusual to have
Speaker 2: a child that goes on and ends up in in
Speaker 2: manufacturing is very unusual.
Speaker 2: Um, and we could talk about whether that's a good
Speaker 2: thing or a bad thing. I don't think I'm just
Speaker 2: to be clear, I'm perfectly happy with manufacturing jobs. I'm
Speaker 2: not suggesting that they're horrible or they're all horrible or
Speaker 2: we shouldn't have them. I'm just saying that if you
Speaker 2: look at the structure of the US economy and you
Speaker 2: look at where most of the jobs are, it's not
Speaker 2: in manufacturing.
Speaker 2: And it's likely to be less in manufacturing the future
Speaker 2: for the reasons that you just indicated, as you move
Speaker 2: towards more automation in plants, you have fewer people who
Speaker 2: are on the assembly line, making the washing machines. You
Speaker 2: might have more people who are fixing the assembly line.
Speaker 2: My, my son does that. My son is in maintenance
Speaker 2: at the, at the Tesla plant in, in San Francisco.
Speaker 2: So he's working very hard on everything from the robots
Speaker 2: themselves to the assembly line production to make sure that
Speaker 2: it still works. But they're not, he's not putting the
Speaker 2: door on the car. The robot puts the door on
Speaker 2: the car, you know, and, and
Speaker 2: So there's jobs in this space, but they're either fixing
Speaker 2: the robot, putting the door on the car, or they're
Speaker 2: programming the robot, you know, or they're doing very simple
Speaker 2: things like, you know, bringing the steel to the beginning
Speaker 2: of the assembly line to make sure that it can
Speaker 2: then be stamped out and put into the vehicle. So that,
Speaker 2: I think the kind of jobs that are available in
Speaker 2: manufacturing are shifting.
Speaker 1: Absolutely. Deborah, I don't know if you've watched this documentary
Speaker 1: called An American Factory. It was on Netflix 4 or
Speaker 1: 5 years ago. It is about a Chinese glass company
Speaker 1: opening up a plant in Dearborn, Michigan, and you see
Speaker 1: there that the Chinese engineers and technicians and foremen bringing
Speaker 1: their work practices to an assembly line manufacturing plant in
Speaker 1: the US and it is backbreaking work, although it is
Speaker 1: a very automated plant.
Speaker 1: And just like the Tesla plant you're talking about, there
Speaker 1: is a lot of robot arms doing things, but still,
Speaker 1: when you make a windshield for a car or a
Speaker 1: glass display for a phone, there is a very complex
Speaker 1: man-machine interaction. It requires a lot of mental equity, but
Speaker 1: also entails standing around machines hours at an end. So
Speaker 1: the one thing that you see in the documentary is
Speaker 1: that there are a lot of American workers who just
Speaker 1: don't have the health.
Speaker 1: To stand around in an assembly line using both their
Speaker 1: mind and their body for 8 hours, 10 hours a day,
Speaker 1: which is the minimum that the Chinese owners expect.
Speaker 2: Yeah, I mean, my son regularly will clock 18,000 steps
Speaker 2: in a shift, and his shifts are 12 hours. So,
Speaker 2: you know, an 18,000 step day every day that you're
Speaker 2: on the site is very challenging and you know, my
Speaker 2: son who's young.
Speaker 2: is already looking ahead and saying, you know, I don't, uh,
Speaker 2: this clearly is not for me, uh, a, a lifetime
Speaker 2: kind of a job because I, among other things, I'm
Speaker 2: not going to be able to do 18,000 steps as
Speaker 2: I get older. This is going to become more and
Speaker 2: more physically challenging. And so, you know, again, the sort
Speaker 2: of evolution of what it is that we're asking workers
Speaker 2: to do is also challenging. It's challenging for them, and
Speaker 2: they're gonna need, again, upskilling, reskilling, that's get you all
Speaker 2: into a
Speaker 2: Discussion about the changing nature of labor, but my point
Speaker 2: is mostly just to say.
Speaker 2: There are jobs in manufacturing, we should maintain some jobs
Speaker 2: in manufacturing for many, many reasons, but that's never going to,
Speaker 2: it's unlikely to be, I, I shouldn't never say never anymore.
Speaker 2: It's unlikely to be the growth sectors of the future
Speaker 2: for the United States or for other advanced industrialized economies
Speaker 2: because of many things that are happening, not the least
Speaker 2: of which is automation. Not, not so much by trade,
Speaker 2: by the way. It's much more automation of the existing factories.
Speaker 2: I'm
Speaker 2: People keep saying the United States doesn't manufacture anything. That's
Speaker 2: not true at all. The United States still manufactures an
Speaker 2: awful lot, and the United States is, in fact, incredibly
Speaker 2: successful as a manufacturing economy, but what it doesn't do
Speaker 2: is generate a lot of jobs in those manufacturing sectors.
Speaker 2: It does so through automation and through, um, you know,
Speaker 2: other kinds of, of procedures that make it easier to
Speaker 2: produce the thing that you want at the end of
Speaker 2: the day with fewer people.
Speaker 1: Right. Yeah, absolutely.
Speaker 1: Um, Deborah, I'm not sure the question I'm about to
Speaker 1: ask you is a hard question or an incredibly easy question,
Speaker 1: but here it goes. Trump 2.0, early days, but what's
Speaker 1: your sense of where we're headed?
Speaker 2: I think it's going to be very bad. I, I, I,
Speaker 2: I really, I am extremely alarmed about the direction of travel,
Speaker 2: and it's not just because I, obviously I'm not a
Speaker 2: fan of protectionism, and we're about to get a lot
Speaker 2: of it. I think it's because we're getting a lot
Speaker 2: of protectionism from the US, but it's going to be
Speaker 2: met by
Speaker 2: Protectionist behavior in other places and it's going to be
Speaker 2: met by retaliatory behavior in other places, and the combination
Speaker 2: of protectionism, additional protectionism, retaliation, new retaliation is going to
Speaker 2: potentially spin us into a a whirling cycle of bad things,
Speaker 2: and I just worry that uh that's where we're headed.
Speaker 2: We are, we have forgotten why trade matters to us, one.
Speaker 2: We have been happy to say we would rather have jobs,
Speaker 2: this kind of job over that kind of job. We
Speaker 2: seem perfectly fine to assume that you can do what
Speaker 2: you want, whatever you need, and that others will go
Speaker 2: along with that.
Speaker 2: Which is I think delusional. Um, and then, you know,
Speaker 2: the system as a whole is in much, much weaker
Speaker 2: state than it was even 8 years ago. And so
Speaker 2: trying to think about like who on the global stage
Speaker 2: is going to be able to stand up and say
Speaker 2: this is not in our interest, it's not in our
Speaker 2: collective interest, we need to do something about this.
Speaker 2: I am deeply worried. I'm deeply worried. I'm deeply worried,
Speaker 2: of course, about the United States, but I'm also worried
Speaker 2: about what this does for other countries, and I'm extraordinarily worried,
Speaker 2: and I don't think anyone is talking about it, but
Speaker 2: I'm very worried about the developing economies, many of which are,
Speaker 2: especially when you get down to the poorest countries.
Speaker 2: We are going to be so far back of the
Speaker 2: queue of priorities that I, again, I'm, I'm deeply worried
Speaker 2: about what happens in a lot of developing countries that
Speaker 2: we're making pretty strong forward progress in terms of growth
Speaker 2: and new job opportunities, new, new sources of income and
Speaker 2: revenue for them, and now suddenly may not have that.
Speaker 2: Cause if you close your market, you're not just closing
Speaker 2: it to one country, you're closing it to all. And
Speaker 2: so that, again, limits the potential for developing economies to
Speaker 2: participate in economic growth.
Speaker 1: I want to expand our conversation to the broader global
Speaker 1: economy momentarily, but first, just staying in North America, Deborah, USMCA,
Speaker 1: are they going to dig it out again and is
Speaker 1: Mexico likely to suffer a big setback and Canada and
Speaker 1: the US get tighter? I mean, what, what's your sense
Speaker 1: of where all this is going?
Speaker 2: I think USMCA is in serious trouble. I mean, they
Speaker 2: were already due for a renegotiation in 2026. In a
Speaker 2: piece of irony, they set that date because they thought
Speaker 2: it would be after a potential second Trump administration and
Speaker 2: so then it would be fine, and now suddenly here's
Speaker 2: Trump in the 2026 review period.
Speaker 2: Um, I don't think we're gonna wait until 2026 to
Speaker 2: have this discussion, and in fact, Trump's, one of Trump's
Speaker 2: many executive orders on his first day included a directive
Speaker 2: to his agencies to give him recommendations about what should
Speaker 2: be done with NAFTA or USMCA immediately. So that report
Speaker 2: is due by April 1st, and that recommendation is likely
Speaker 2: to include the potential for withdrawal, even. And for serious
Speaker 2: adjustments in all kinds of things.
Speaker 2: So I, I think USMCA is headed for Rocky period
Speaker 2: even before we get to 2026. And Trump's early comments
Speaker 2: and early actions around tariffs are not directed at, have
Speaker 2: not been directed at China or, you know, others, it's
Speaker 2: gone after Canada and Mexico.
Speaker 2: This is, uh, you know, the Canadians especially are really
Speaker 2: quite incensed about this because they say, wait a second,
Speaker 2: we're being held accountable for immigration and fentanyl in particular.
Speaker 2: That's what Trump keeps complaining about, neither one of which
Speaker 2: seems to be a problem out of Canada. So even if,
Speaker 2: let's imagine the Canadians said, OK, you, you win, Mr. President,
Speaker 2: you're right, we should do something about immigration and fentanyl.
Speaker 2: How do you fix a problem that doesn't exist?
Speaker 2: Even if I wanted to show you that I was
Speaker 2: doing a great job fixing this problem, because it's not
Speaker 2: a real problem, there isn't any evidence I could give
Speaker 2: you that would say this is the solution to this
Speaker 2: problem that you've imagined.
Speaker 2: So, you know, the Canadians are really up against it.
Speaker 1: But on Canada, is there sufficient political will on Canada's
Speaker 1: side to retaliate if the US goes ahead with this 25%
Speaker 1: tariff that it's threatening? Well,
Speaker 2: again, this is for me why Trump is so alarming.
Speaker 2: It's not just that Trump is alarming, it's that the
Speaker 2: the leaders who are around him are much, much more
Speaker 2: weak than they were, and Canada is about to enter
Speaker 2: a new political election, which we haven't seen in Canada
Speaker 2: in quite some time.
Speaker 2: That comes at like the worst possible time, right? The worst,
Speaker 2: the worst possible time is uh to have your own
Speaker 2: transition at the moment when your most important economic and
Speaker 2: security partner is treating you as if you were the adversary,
Speaker 2: you know, this is not a recipe for successful Canadian
Speaker 2: policymaking or for bold policymaking from Canada. So, uh, you know,
Speaker 2: we'll see. I suspect they're gonna try to muddle through somehow.
Speaker 2: But that's gonna be very problematic. Uh, you know, Trump
Speaker 2: is in a position to do a fair amount of
Speaker 2: damage to the Canadian economy, and Canada is in less
Speaker 2: strong position to do something to the United States economically,
Speaker 2: but also politically to, you know, again, they would have
Speaker 2: to really be committed to doing so and at an
Speaker 2: election cycle, it's always easy for the opposition to take
Speaker 2: a side that
Speaker 2: In the long run is going to be a problem
Speaker 2: for them.
Speaker 1: Yeah, I'm beginning to see that sort of jockeying for
Speaker 1: either curry favor with the US or trying to carve
Speaker 1: out something independent, but yes, you're right, the political space
Speaker 1: is extremely narrow in Canada. They're in a pretty weak spot.
Speaker 1: And Deborah, let me just go back to the point
Speaker 1: that you made. It's just not Canada. When we look
Speaker 1: around the world, many countries are right now going through
Speaker 1: a rather fragile moment in their
Speaker 1: A political cycle, you know, Germany and France and Korea
Speaker 1: and so on. So yeah, Trump is pretty lucky. He
Speaker 1: is in a position to do a lot of things
Speaker 1: where the other side doesn't have a very cohesive stance.
Speaker 2: Yeah, I had, I had someone who I thought was,
Speaker 2: was brilliant at this actually and said, you know, we're
Speaker 2: in a bit of a prisoner's dilemma here, which is,
Speaker 2: while the rest of us all have strong incentives to cooperate,
Speaker 2: to maintain open markets, to maintain lots of different principles
Speaker 2: that have been important, bedrock principles for some period of time,
Speaker 2: each of us has an individual incentive to cave and
Speaker 2: collapse and to say to Trump, you know, whatever you want, we'll,
Speaker 2: we'll do it we'll do it, sir.
Speaker 2: And so you have this sort of prisoner's dilemma pressure
Speaker 2: that is likely to lead everyone to try, or nearly
Speaker 2: everyone to, to ultimately cave, and the net result for
Speaker 2: all of us is significantly worse off.
Speaker 1: Yeah. Uh, I, I think that the, the risk of
Speaker 1: that is extremely high. Now Deborah, it's not all about
Speaker 1: the US and it's not just one-sided. The countries who
Speaker 1: might be on the receiving end of the US are
Speaker 1: pursuing regional agreements, bilateral agreements, just as an offset to
Speaker 1: some extent of the US are turning away from.
Speaker 1: The world that we have been familiar with characterized by globalization.
Speaker 1: So let's talk about a couple of trade agreements. We
Speaker 1: talked a little bit about USMCA. What about CPTPP? Is
Speaker 1: there any strategy in there among those non-US entities to
Speaker 1: do something?
Speaker 2: Well, I would like to think so. I've been trying
Speaker 2: to buck them up to be more bold for quite
Speaker 2: a long period of time, and it's been an uphill slog,
Speaker 2: but I, I'd like to think again, in every crisis
Speaker 2: is an opportunity, and if there was ever an an
Speaker 2: opportunity for CPTPP members to band together and to show
Speaker 2: that open trade matters, that cooperation matters, that coordination on
Speaker 2: regulations and so forth makes a difference, that you end
Speaker 2: up with a stronger economic growth as a result of it.
Speaker 2: This is the moment.
Speaker 2: And so the CPTPP countries, uh, we have 12 of
Speaker 2: them now, it's an active agreement, including the the UK
Speaker 2: who just became a member, um.
Speaker 2: Just became a member. I, I think it's, there is
Speaker 2: a platform there for them to be bolder, but they
Speaker 2: are hamstrung themselves by two things in particular. One is
Speaker 2: on their own, again, they're relatively
Speaker 2: They're not large economies on their own, so they have
Speaker 2: to actually coordinate in order to have real heft, and
Speaker 2: that's difficult. Coordination is always difficult, and they have to
Speaker 2: coordinate the first and most urgent issue or an urgent
Speaker 2: issue for them is the expansion process. In the queue
Speaker 2: to expand is China and Taiwan.
Speaker 2: And a bunch of other countries. That decision on what
Speaker 2: to do about China and Taiwan is really tying the
Speaker 2: group up in knots because they, they cannot make a
Speaker 2: political decision to either move or not move and so
Speaker 2: their solution to this is to do nothing at all,
Speaker 2: and I think
Speaker 2: The more you get buffeted by external events, the harder
Speaker 2: it is to continue to do nothing at all. So,
Speaker 2: that's the challenge for CPTPP is to sort of figure
Speaker 2: out how are we gonna stay united, again, in this
Speaker 2: sort of prisoner's dilemma, law of the jungle world that
Speaker 2: we're entering, but I think there is a platform there
Speaker 2: already made. It is providing economic benefits to companies already
Speaker 2: and has been since 2018 when it went into force.
Speaker 2: So there's, there is room for CPTPP countries to seize
Speaker 2: the initiative and to be bold, but it is challenging.
Speaker 2: I mean, it's definitely challenging.
Speaker 1: And what about REP?
Speaker 2: Yeah, the Regional Comprehensive Economic Partnership is 1615 countries now
Speaker 2: in Asia, so all of ASEAN, China, Japan, Korea, Australia,
Speaker 2: and New Zealand. That again, is a really interesting agreement
Speaker 2: because in addition to the direct economic benefits that come
Speaker 2: from using the agreement, you have a potential platform for
Speaker 2: conversations about trade in Asia for Asia.
Speaker 2: And like CPTPP, I would argue that at a time
Speaker 2: of global shifts, it is the perfect time actually for
Speaker 2: more intensive dialogue and communication around where do we want
Speaker 2: the future to be, what kinds of actions are we
Speaker 2: prepared to take, what kinds of actions are we not
Speaker 2: prepared to take. Let's actually have those conversations with one another.
Speaker 2: We can't do it in a lot of other settings.
Speaker 2: REP is a natural platform for that.
Speaker 2: Accept that, and it goes back to the sort of,
Speaker 2: you know, weak leadership. Like, who's gonna lead that? The, the,
Speaker 2: the Koreans certainly know know we wouldn't even know who
Speaker 2: would show up. The Japanese really struggling internally to make
Speaker 2: sure that their leader remains in place. Australia's facing an
Speaker 2: election going on. New Zealand has shifted its policies. There
Speaker 2: are new leaders in across ASEAN as well, who would be.
Speaker 2: Jockeying for position, so you know, you think about like
Speaker 2: it's a great idea.
Speaker 2: But practically speaking, who's gonna lead the charge? Answer, oh,
Speaker 2: probably not really anybody, which means you don't get that
Speaker 2: kind of coordinated activity that you would like to see.
Speaker 2: But that doesn't mean, let me just be clear, and
Speaker 2: this is why I, I think Asia is the place
Speaker 2: to be. That doesn't mean that leaders themselves don't understand
Speaker 2: the importance of open trade. I mean, for a region
Speaker 2: that has been built on economic openness, if that ends,
Speaker 2: it's a problem for them. And so you, you do see,
Speaker 2: which is very heartening in my view, you do see
Speaker 2: lots of leaders in this region who are continuing to
Speaker 2: pursue trade openness agreements in any kind of fashion.
Speaker 2: Whether it's these big mega regionals like CPTPP or REP,
Speaker 2: whether it's sector specific agreements, so we have some green
Speaker 2: economy agreements between Singapore and Australia, New Zealand just just
Speaker 2: put through a very interesting uh trade and climate.
Speaker 2: Agreement with the unusual batch of countries. Whether it's digital
Speaker 2: economy agreements, we have a bunch of those growing in place,
Speaker 2: bilateral trade, a lot more trade with the EU, so
Speaker 2: the EU is continuing to sign agreements with this region
Speaker 2: or restart, like with the Malaysians. Um, the GCC, the
Speaker 2: Gulf Cooperation Council, is also very keen to do trade agreements, uh,
Speaker 2: with members of Asia.
Speaker 2: And so I think there is this sort of interesting
Speaker 2: dichotomy between the protectionist poll, which is likely to get
Speaker 2: stronger as Trump gives license for leaders that like protectionism
Speaker 2: to go down that path, with an integration poll that's
Speaker 2: always been there and a cooperation set of communi, you know,
Speaker 2: set of agreements that keeps you open.
Speaker 1: Deborah, within Asia, when you talk about trade in Asia
Speaker 1: for Asia, with respect to goods, we actually have pretty
Speaker 1: low tariff barrier and inputs do move around pretty freely
Speaker 1: in the region and hence we have a regional supply
Speaker 1: chain which is very efficient. Talk to me a little
Speaker 1: bit about trade and services. I think once somebody told
Speaker 1: me that if you have a bunch of Google engineers
Speaker 1: sitting in Malaysia for a project, they can't just get
Speaker 1: into a plane and go to another project in Thailand.
Speaker 1: There are issues related to those engineers having work permits
Speaker 1: in uh Thailand, although they're all part of our SAP.
Speaker 1: So have we made any progress that is sort of
Speaker 1: tangible nature with respect to trade and services?
Speaker 2: Well, trade in services is, as I said earlier, super
Speaker 2: important because that's the direction of travel for most advanced, uh, economies.
Speaker 2: So you need to think about trade and services, but
Speaker 2: our rule making around trade and services is still weaker
Speaker 2: than it should be. And there's a number of reasons
Speaker 2: for that, but the most important, I think, is that
Speaker 2: when we start talking about trade and services,
Speaker 2: It's actually about your domestic level regulations that we're discussing, right?
Speaker 2: So if we want to provide banking services in a
Speaker 2: different market, it's about what are the banking rules that
Speaker 2: I have in my market and whether or not you
Speaker 2: qualify under my existing rules. And if you don't qualify,
Speaker 2: then am I gonna change my rules? Am I gonna
Speaker 2: make you follow my existing rules? And so it's all
Speaker 2: about sort of behind the border or inside the domestic economy,
Speaker 2: rules and regulations.
Speaker 2: That can be much more sensitive, even if it's uh
Speaker 2: an area where both parties agree or all parties agree
Speaker 2: that something should be done, the practicalities of making changes
Speaker 2: at the domestic level to accommodate more trade and services
Speaker 2: is difficult. So that's, I think, why we don't have
Speaker 2: the the same commitments to trade and services. It's also
Speaker 2: harder to identify.
Speaker 2: First of all, what services are traded at what levels.
Speaker 2: We just don't have the statistics that we do on
Speaker 2: trade and goods. It's much harder, much, much harder to
Speaker 2: model or to guess at what is the benefit of
Speaker 2: opening up this services sector. Whereas if I say I'm
Speaker 2: gonna change a tariff level, that's relatively easy to model,
Speaker 2: and we have lots and lots of tools to do that.
Speaker 2: We don't have a tool that says, if I
Speaker 2: Grant 3 licenses for insurance brokers. This is what happens.
Speaker 2: If I grant 5 licenses, this is what happens. Like
Speaker 2: we just don't have those models uh to easily show
Speaker 2: us what the difference is. And so the net result
Speaker 2: of that is services tend to be still much more protected.
Speaker 2: Uh, and when you talk about different ways that you
Speaker 2: deliver a service, the most protected by far in this
Speaker 2: region is movement of people, which is why your Google
Speaker 2: engineers cannot move, because they are, it's not, it's not
Speaker 2: that Google as a company cannot deliver services in multiple
Speaker 2: locations necessarily, it's that
Speaker 2: Their people cannot move seamlessly between their own entities to
Speaker 2: deliver those services, at least on a temporary basis. Forget
Speaker 2: about long term immigration, just even on a temporary basis,
Speaker 2: the project ends, I go to another project, that can
Speaker 2: be complicated in this region.
Speaker 1: Um, I want to take a small detour, Deborah. I
Speaker 1: read this article which was in the Henrich Foundation website.
Speaker 1: You wrote it, I think it came out just a
Speaker 1: few days ago. The title is Who Is Us, us
Speaker 1: in inverted comma. Why a Battle to define connected cars Matters.
Speaker 1: I think your article sort of underlines or underscores the
Speaker 1: complexity associated with.
Speaker 1: Nationality-based production, which is what Trump is trying to go
Speaker 1: after because the world has changed a lot. So walk
Speaker 1: us through your article.
Speaker 2: Yeah, thanks very much. I'm happy that you gave a
Speaker 2: shout out to this piece. I've, I've been working on
Speaker 2: it for quite a while, and it's been a challenge
Speaker 2: to put into words my, my thinking on this because it's,
Speaker 2: it's a sort of a big amorphous idea. But what
Speaker 2: I'm trying to get at above all, is that
Speaker 2: We have often treated firms as if they were countries,
Speaker 2: so we say things like, China should do such and such,
Speaker 2: the United States should do such and such, but actually
Speaker 2: we're talking about
Speaker 2: Hundreds, thousands, millions of different firms and consumers who are
Speaker 2: doing whatever it is that we would like them to
Speaker 2: do or not like them to do.
Speaker 2: So, that's always been a challenge, but it's becoming even
Speaker 2: more urgent in a world in which we create incentives
Speaker 2: for firms that are considered to be Chinese or American,
Speaker 2: and we say only Chinese firms are subject to these rules,
Speaker 2: or only American firms are eligible for these benefits. So
Speaker 2: the question comes up, well, who is us? Who is Chinese?
Speaker 2: Who is American?
Speaker 2: And our traditional ways of looking at this don't seem
Speaker 2: to fit particularly well. So it's not about even where
Speaker 2: you're headquartered or where you pay taxes, or where you
Speaker 2: hold a board meeting, or where you manufacture the thing
Speaker 2: that you're making, or where you deliver the services from
Speaker 2: or to. You get this gets extremely complicated. And when
Speaker 2: I saw this draft regulation, which is now a firm regulation,
Speaker 2: unless the Trump administration undoes it,
Speaker 2: On connected cars or on electric vehicles, it gets really,
Speaker 2: you can really see the sort of sharp edges of
Speaker 2: this policy dilemma, and let me just briefly describe what
Speaker 2: that is, which is this piece of legislation says that
Speaker 2: for connected cars, again, like, think of them as electric vehicles,
Speaker 2: passenger cars.
Speaker 2: You cannot have any hardware or software with a nexus
Speaker 2: to
Speaker 2: The People's Republic of China, or Russia, but we don't
Speaker 2: care about Russia in this instance. So the, the, that
Speaker 2: raises all sorts of red flags in your head, or
Speaker 2: at least it should, which is like, how, what is
Speaker 2: a nexus? How much nexusing do we need to do
Speaker 2: in order for this firm that is supplying hardware or
Speaker 2: software to a connected car company.
Speaker 2: Um, how close do they need to be to the
Speaker 2: PRC and what constitutes significant nexus, like, so there are
Speaker 2: really big questions that are overarching, that are not being addressed,
Speaker 2: and as we create more and more rules like this
Speaker 2: connected car regulation, we have to think even harder about
Speaker 2: what does it mean to be us, whatever us is.
Speaker 2: Why do we assume that an American company, in quotations,
Speaker 2: is less of a security, national security.
Speaker 2: Economic threat to something, then, uh, I don't know, a
Speaker 2: Singaporean company or a Chinese company or a company from Lesotho.
Speaker 2: I mean, we, we, we really need to think about
Speaker 2: what is it that is the source of the threat,
Speaker 2: if there is one, and then how do we design
Speaker 2: policies that capture just that and not everything under the sun.
Speaker 1: There were, I was in India recently on the streets
Speaker 1: of India. You see all these MG cars. Indians don't
Speaker 1: tend to think MG as a Chinese car, although it's
Speaker 1: owned by SAIC, and primarily the reason is that it's
Speaker 1: a joint venture in India. So the Indians are doing
Speaker 1: the same thing that the Chinese have done over the decades,
Speaker 1: which is require a joint venture with a local partnership.
Speaker 1: So JSW and SAIC, 50/50 owner of MG cars. But
Speaker 1: the fact of the matter is the components are all Chinese.
Speaker 1: But now you have a beneficial owner, which is Indian,
Speaker 1: at least for half of it, and India seems to
Speaker 1: be OK with it despite having various reasons of friction
Speaker 1: with the Chinese. Similarly, you know, a company like Volvo,
Speaker 1: we all think it's a Swedish car, but actually it's
Speaker 1: owned by Geely in China. Now, is Volvo not going
Speaker 1: to be able to run on the streets of the
Speaker 1: US because the ultimate owner is that, but some components
Speaker 1: are European, some are Chinese. It, it, it becomes a
Speaker 1: rather nebulous situation.
Speaker 2: And that was the, the, the real point of my
Speaker 2: piece was to say we are not thinking hard enough
Speaker 2: about who is us. And as we create these rules, the,
Speaker 2: the consequences and the unintended consequences of rules like you
Speaker 2: may not have a sufficient nexus to this or that country.
Speaker 2: Uh, uh, becomes even more urgent to, to really think about, well,
Speaker 2: why is it, why is it actually that having a
Speaker 2: nexus to this particular country is the problem? Is it,
Speaker 2: is it, why? I mean, in some cases it's a
Speaker 2: clear line and you can say, ah, because here in
Speaker 2: this case, we do have ownership, for example, potentially by
Speaker 2: The Chinese government, which controls the board, which controls the factory,
Speaker 2: which controls the production, which controls the, you know, you could,
Speaker 2: you can draw a very straight line and that maybe
Speaker 2: then we say, yeah, you know, that does look very
Speaker 2: alarming and we should be careful about that. But that's
Speaker 2: not always the case, and you just mentioned several examples
Speaker 2: that I think are much more thought provoking, like, is
Speaker 2: this really a risk to us? And if so, why?
Speaker 2: What is it about this that makes it risky? And
Speaker 2: if
Speaker 2: Again, life is full of risks. Is it a sufficient
Speaker 2: risk that we think we should undo existing legislation on
Speaker 2: existing rules in order to change it to stop this
Speaker 2: kind of behavior in the future?
Speaker 1: Let's um reverse the perspective of this discussion from what
Speaker 1: the US is seeing and what the US would do
Speaker 1: to China. What is uh China's strategy going forward?
Speaker 2: In the first Trump administration, it, it looks as though
Speaker 2: the Chinese strategy was to buy for time.
Speaker 2: To engage in negotiations in I, I, I think.
Speaker 2: Uh, again, we're gonna have a big argument about this,
Speaker 2: but I would say they engaged in those negotiations at
Speaker 2: a fairly high level and they appear to have taken
Speaker 2: it seriously. Did they follow through on all their commitments? No.
Speaker 2: What they, did they intend to follow through on all
Speaker 2: of their commitments? It's unclear. But at least the process
Speaker 2: itself was a high level of engagement, extensive negotiations. They
Speaker 2: produced a phase one document, they agreed to purchase things
Speaker 2: far in excess of anything they'd ever purchased before.
Speaker 2: You know, and so I think the Chinese strategy was,
Speaker 2: let's see if that works and in fact.
Speaker 2: Of course, they had higher tariffs applied against their products,
Speaker 2: up to 25% on a very wide range of products.
Speaker 2: Many of those tariffs remain today. In fact, all of
Speaker 2: them remain today. None of them have been removed and
Speaker 2: none of them have been reduced. In fact, they've had
Speaker 2: more tariffs applied to Chinese products.
Speaker 2: Um, so that is obviously a downside if you're China. So,
Speaker 2: you go into Trump too, what are you gonna do?
Speaker 2: That playbook, I don't think is gonna work as well. So,
Speaker 2: it's not obvious that Trump wants a deal with China,
Speaker 2: and if he does, what does it look like? It's
Speaker 2: gonna be quite different.
Speaker 2: So I think the Chinese at the moment are.
Speaker 2: Go to do two things. You can already see it.
Speaker 2: They started before Trump was inaugurated with a few smaller
Speaker 2: actions to indicate, I think, their willingness to respond this time.
Speaker 2: And those could be ramped up, they could be made
Speaker 2: much more challenging for US companies and, and for the
Speaker 2: United States in general, in a lot of different ways.
Speaker 2: It doesn't have to be tariffs for tariffs. There are
Speaker 2: lots of things that the Chinese can do if they
Speaker 2: choose to retaliate against the US or US companies, um,
Speaker 2: big and small. So I think there will be some
Speaker 2: retaliation that takes place if necessary because the Chinese want to,
Speaker 2: to indicate their own resolve.
Speaker 2: But they will, I think, also see if there is
Speaker 2: a deal to be had because if there's a deal
Speaker 2: to be had and it's relatively simple, then I think
Speaker 2: China would say fine. At the moment, Trump has been
Speaker 2: threatening a 10% tariff against China. Trump has been threatening that.
Speaker 2: That is relatively manageable, I think if you're China, because
Speaker 2: they're ultimately, after the first Trump administration, the Chinese diversified
Speaker 2: themselves and they are far less reliant on the US
Speaker 2: market than they were. They have a lot, lot more
Speaker 2: on the table than they did at the time. So
Speaker 2: a 10% tariff, not great, but they could manage. If
Speaker 2: it goes beyond that, and if it goes into other areas,
Speaker 2: then they have new challenges and I would say that
Speaker 2: for China, to me, the bigger worry at the moment
Speaker 2: is not what Trump is gonna do.
Speaker 2: But what Congress is going to do, because Congress is
Speaker 2: united around the idea that that China is the biggest
Speaker 2: adversary and so there is a lot of activity that
Speaker 2: I expect to see out of Congress.
Speaker 2: Um, and out of the, the agencies, White House agencies
Speaker 2: that are not tariff related, that could be much more
Speaker 2: problematic if you're China than whatever Trump decides to do
Speaker 2: from the Oval Office.
Speaker 1: Now, I really cannot believe I'm about to say this,
Speaker 1: but I'll say it anyway, is Elon Musk the honest
Speaker 1: broker between China and the United States?
Speaker 2: I think that's less clear. I think if you look
Speaker 2: at Musk, you know, in, in his huge volume of
Speaker 2: trade activities and business activities, his, his dealings in China
Speaker 2: with Tesla is actually pretty small, much more important for
Speaker 2: him and much bigger for him in terms of the
Speaker 2: financial benefits are his other businesses. And so, I am
Speaker 2: unconvinced that that Musk is gonna moderate even his own
Speaker 2: behavior based on
Speaker 2: Tesla being in China, he is more likely, I, I
Speaker 2: would argue to cut that out or off than to
Speaker 2: cut off or out his other initiatives like infrastructure, you know, the,
Speaker 2: the telecommunications infrastructure, you know, space exploration, etc. So those
Speaker 2: are contracts that are bigger and more urgent for him
Speaker 2: than Tesla in China.
Speaker 2: And I, if push comes to shove, I don't think
Speaker 2: he's gonna come down on the side of let's save Tesla,
Speaker 2: let's intervene in US China relations.
Speaker 2: But I could be wrong, because again, we're dealing with
Speaker 2: very um volatile personalities and so I maybe it depends
Speaker 2: on the day and the hour, I'm not sure.
Speaker 1: Well, I think your point on Tesla is very well taken.
Speaker 1: I mean, Tesla does sell a lot of cars in
Speaker 1: China and the made in China Tesla cars are sold
Speaker 1: all over Asia, including in Singapore, but I think we
Speaker 1: are at an inflection point because the kinds of cars
Speaker 1: that the Chinese brands are rolling out, they're not only
Speaker 1: ultra competitive with Tesla, I think going forward they're going
Speaker 1: to be out competing Tesla on price and quality and technology.
Speaker 1: So if Trump is really, you know, Musk is really
Speaker 1: forward looking, you're right, he may actually focus on the
Speaker 1: more lucrative chunkier thing than being fixated on his footprint
Speaker 1: in China. Yeah, mercurial personalities, maybe he's, you know, he
Speaker 1: and Trump want to do a deal on TikTok and
Speaker 1: God knows where that goes. But, but yeah, Deborah, I
Speaker 1: think we need to have you back like every 6
Speaker 1: months to do an update on the show.
Speaker 2: Yeah, well, trade has never been more interesting. We had
Speaker 2: hats made in the first Trump administration that said making
Speaker 2: trade great again. And I, you know, I thought it was,
Speaker 2: it was good, and I enjoyed the hat, and I
Speaker 2: put the hat to the side. And now I'm like, oh,
Speaker 2: we're gonna have to make more hats because we're gonna
Speaker 2: make trade great again for the next however long as everyone,
Speaker 2: including people who never cared about trade, suddenly are, you know,
Speaker 2: having conversations about tariffs. You get in a taxi anywhere
Speaker 2: in the world and all of a sudden tariffs comes up.
Speaker 2: From a taxi driver like that never happened before Trump,
Speaker 2: and it will happen again in Trump too.
Speaker 1: I think if you have a t-shirt that says I
Speaker 1: did Section 301 in my dissertation, even that will get
Speaker 1: response from
Speaker 1: people.
Speaker 2: I have a lot of t-shirt ideas that are coming
Speaker 2: out of the Trump
Speaker 2: administration.
Speaker 1: Deborah, thank you so much for your time and insights. Sure,
Speaker 2: thank you very much for
Speaker 2: having me.
Speaker 1: It's great to have you and thanks to our listeners
Speaker 1: and viewers as well. Kope was produced by Ken.
Speaker 1: Bridge at Spy Studios. Via Lee and Daisy Sharma provided
Speaker 1: additional assistance. It is for information only and does not
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