Latest news with #StrategyRisks
Yahoo
23-04-2025
- Business
- Yahoo
Faceoff in Manhattan: Should US ‘decouple' supply chains from China?
NEW YORK – Combatants at the Council on Foreign Relations, in the midst of economic upheaval in the trade and supply chain relationship between China and the United States, took on one of the most basic questions facing supply chains today: Should the U.S. simply call it quits where China is concerned? The four-person debate Monday evening at the New York headquarters of the elite organization reviewed the prospect of that potentially stark change just hours after another huge decline in equities, spurred primarily by a trade war with China as the main adversary, had put more pressure on many dollar-based assets. FreightWaves was invited to the closed-door event. Isaac Stone Fish, CEO and founder of Strategy Risks, a firm that advises companies on China-related risks, kicked off the debate with a hypothetical: If there were a third world war, 'how many people think that the United States and China are going to fight on the same side?' No hands went up. 'For that reason, decoupling is a necessity,' Fish said. On the other side, Benn Steil, senior fellow and director of international economics at the Council on Foreign Relations, described decoupling as a 'manmade disaster of epic proportions.' Decoupling would be like the negative consequences of Brexit 'on steroids.' Whereas Fish spoke of a conflict that might not occur or, if it did, could be years in the future, Steil was eyeing a shorter time frame. Steil referred to the 'decoupling program on which we are now entering over the coming months and beyond.' Supply chains under pressure will mean that 'prices in the United States and interest rates are going to be materially higher than they should be, and investment and employment are going to be lower.' Longer term, he said, 'decoupling is going to undermine the special status of the U.S. dollar internationally, a status that President Trump has pledged to defend.' Replacing Chinese finished goods with U.S. finished goods is not the only issue, Steil said. Much of the import lineup the U.S. brings in from China is made up of intermediate goods that are 'absolutely vital to U.S. competitiveness internationally, and therefore also vital to maintaining the primacy and readiness of the U.S.' As is the case when academics and think tank analysts speak and debate, opinions were strong. Derek Scissors, a senior fellow at the American Enterprise Institute, was the partner with Fish on the side favoring decoupling. His opening argument was simple: The U.S. was a lot better off before its level of economic engagement began growing when China entered the World Trade Organization in 1999. Comparing two countries he identified as C and D, Scissors ticked off a range of statistical comparisons that showed country C as having slower GDP growth, higher income inequality, a smaller percentage of the population in the work force and a reduced level of creativity as measured by the granting of patents. Country C, Scissors said, was the U.S. today. Country D was the U.S. in the late '90s before China's WTO entry. 'I would argue that as a society, we were better off 25 years ago, and if we can't go back in time 25 years, we can at least try to identify what caused the weaknesses in our economy, which have had profound social and political weaknesses,' Scissors said. 'One of those major causes is tying ourselves too closely to China.' Before undertaking those growing ties, Scissors said, 'we had more manufacturing employment, we had less wealth inequality and we were not spending ourselves into oblivion. That was a better America.' Steil's partner in arguing against decoupling was Susan Shirk, a research professor at the University of California San Diego School of Global Policy and Strategy and director emeritus of its 21st Century China Center. Shirk's relationship with China goes back to 1971, when she was part of a highly publicized – and then rare – visit by a group of college students to China soon after the country slowly began to open its doors to the rest of the world. Shirk said China has been 'overreaching and has become more of an economic and security threat.' But decoupling would be a 'losing strategy' for the U.S., she said, in part because China is far more prepared than the U.S. for such an action. Chinese leader Xi Jinping 'has been fireproofing the Chinese economy ever since he came into power in order to reduce its vulnerability to what he believes is a long-term effort by the U.S. to contain China's economic development.' The end result is that China has diversified its exports away from the U.S. and to other areas of the world, Shirk said. Scissors pushed back several times on any suggestion that he and Fish were backing Trump administration policies. He said currently imposed 145% tariffs on China 'don't do squat because we have not provided resources to Customs and Border Patrol. There is no decoupling going on on the ground that will last more than a few months.' Steil and Scissors were the most pointed in their statements to each other. Steil, with obvious sarcasm, said decoupling could occur if 'you do something really simple, like impose 145% tariffs.' But the U.S. can 'de-risk' itself, Steil said, by 'identifying specific sectors and specific products where you put up specific import barriers or export barriers.' He cited as examples various steps taken by the Biden administration on export controls of AI and chip-related technology. On that issue, the gap between the two sides did not appear all that wide. Scissors tried to note that his concern was over certain products: 'I don't really care about toys, and I don't care about textiles,' he said. The list of areas Scissors said he is concerned with are those with strategic value. He cited rare earth metals and semiconductors. 'Now we have an emphasis on shipbuilding for military reasons,' Scissors added. Replacing supplies of those products during a decoupling will be hard, he said: 'Some of them will take three years. Some of them will take 10. So I'm not looking for a full decoupling.' Fish noted that in any sort of trade standoff, the U.S. and China don't come to the table with identical situations. One big difference: How long could each country hold out? 'Xi Jinping has shown a great willingness to inflict a lot more pain on his citizens than American leaders have,' Fish said. 'In the reality that we live in today, with the U.S. and China, Beijing is far more willing to exert those costs on some people than the United States.' More articles by John Kingston A market on the precipice: 5 takeaways from the April State of Freight Another federal circuit weighs broker liability, boosting odds of Supreme Court review Freight fraud everywhere, but Truckstop CEO asks: Is anybody going to jail? The post Faceoff in Manhattan: Should US 'decouple' supply chains from China? appeared first on FreightWaves. Sign in to access your portfolio
Al Jazeera
19-04-2025
- Business
- Al Jazeera
Infowars: Chinese AI memes and US media barbs
A trade war that pits the world's two largest economies against each other is now under way. Alongside the tariff battle is a heated battle of narratives and messages between the two countries. Contributors: Andy Mok – Senior Research Fellow, Center for China and Globalisation Jude Russo – Managing Editor, The American Conservative Isaac Stone Fish – CEO, Strategy Risks Yun Sun – Director of China Program, Stimson Center On April 15, the civil war in Sudan hit the two-year mark. The Sudanese media landscape has been devastated. According to Reporters Without Borders, since the war began, nearly 450 journalists have fled the country. Meenakshi Ravi has more. Donald Trump's public musings about how Canada should become the United States' 51st state, has Canadians rallying around their flag. The Listening Post's Ryan Kohls discusses the Trump effect and the unprecedented impact it is having on Canadian nationalism and politics. Featuring: Rachel Gilmore – Host, Bubble Pop Jonathan Kay – Editor, Quillette David Moscrop – Author and Journalist
Yahoo
11-04-2025
- Business
- Yahoo
US-China trade war is 'just a taste of what's to come,' expert says
The US and China have increasingly been raising their tariffs. The US has slapped a 145% tariff on goods from China, while China has put a 125% tariff on goods from the US. Strategy Risks Founder and CEO Isaac Stone Fish expects tensions to calm in the near term but thinks that the relationship will "devolve" in the coming months and years. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here. China announced Friday that it will raise tariffs on US goods from 84% to 125%. It's the latest salvo in an escalating trade war between the world's two largest economies that has rattled markets and raised fears of a global slowdown. Joining us now, Isaac Stonefish, strategy risks founder and CEO. Um, Isaac, uh, it's been a little while since we've talked, certainly since this back and forth really heated up here, and as someone who is a a close student of this relationship between the US and China, is it impossible to predict what happens next? What are what are some of your best guesses as to how things develop from here? With the caveat that these have to be guesses, I do think the recent, we are basically at the bottom where I think things are going to go in the near term. I do think the relation is going to devolve in months, years. I think this is just a taste of what's to come, but I do feel like with this roller coaster, we're going to go down perhaps a little bit more, and then relations will improve. China will come to the negotiating table, the two sides will potentially strike some sort of deal, and then six months, a year, two years later, things will be far, far worse. Isaac, I wonder, what do you think the risks are that Beijing starts to really go after American companies, Isaac, that do a lot of business in China? What what could that look like? So, for folks who are in the trenches there, they know that Beijing has been making it a very inhospitable place to do business for years, if not longer. And I do think you're right, I do think things could get quite worse. I think what they could see are tax irregularities, permitting problems, harassment, arrest, torture of workers. And I do want to point out, for American companies, their Chinese staff are far more vulnerable. And so, when Beijing targets individuals working at American companies in China, usually it's the Chinese employees who bear the brunt of it. And Isaac, so you're an American CEO, you're hearing this right now, you're listening to this. What do you do, Isaac? So, what you do is threefold. You better price your China risk, which means looking at all of your partnerships with Chinese entities, your supply chain, your joint ventures. You make sure that you're taking care of your staff and you put safety first, and you do not put your Chinese staff in a line of fire, and you come up with a plan for what happens if the US and China stop just fighting a trade war and have an actual war. What do you do in that case to make sure that you are protected, and that your business can go on not as usual because things would be radically different, but that you have a plan in place.
Vox
18-03-2025
- Business
- Vox
Elon Musk's extensive ties to China, explained
is a senior correspondent at Vox covering foreign policy and world news with a focus on the future of international conflict. He is the author of the 2018 book, Invisible Countries: Journeys to the Edge of Nationhood , an exploration of border conflicts, unrecognized countries, and changes to the world map. Elon Musk has opinions on how a lot of the world's countries should be run. But one country tends to get a pass from the world's richest man. He is, in his own words, 'kind of pro-China.' The self-proclaimed 'free-speech absolutist' has not applied that position to China's draconian censorship regime, and Musk has defended the Chinese government's positions on a range of other issues. From a business perspective, this makes sense. China is vital to Musk's car company Tesla as both a producer of vehicles and as a consumer market. Musk is also hardly unusual among major global tech CEOs in defending China. 'Musk's comments on China aren't out of the norm for the CEO of a major Western business,' said Isaac Stone Fish, CEO of Strategy Risks, a consultancy focused on the risks of doing business in China. 'The distinction is that [Apple CEO] Tim Cook is not on Twitter talking about how awful USAID is or meddling in European politics.' Musk's business interests in China and overall pro-Beijing attitudes also stand out among his new colleagues in the Trump administration. Trump's foreign policy team is generally united in its hawkish views on China. Trump himself has accused Beijing in the past of a policy to 'rape our country' and blamed it for the Covid pandemic, along with a host of other ills. As the US and China appear to be hurtling headlong into a trade war, and even as Trump seeks a meeting with China's Xi Jinping in hopes of hammering out a new trade deal, Musk's ties to China — and the potential leverage they could offer Beijing in future negotiations — are getting more notice in both countries. During the recent quasi-infomercial on the White House lawn, during which Trump purchased a Tesla and made a sales pitch for the slumping company, the president made clear that the profits of Musk's companies will be a priority for the administration. This raises questions about whether the interests of those companies will come into play as the administration shapes its policies toward its fellow superpower. China and Tesla need each other The symbiotic relationship between Tesla and China almost can't be overstated. In 2019, the company opened its Shanghai 'gigafactory' with hundreds of millions of dollars in loans from Chinese banks. It was the company's first factory outside the US, as well as the first wholly foreign-owned car company in China, where automakers typically enter into joint ventures with Chinese companies. It is now Tesla's largest factory, producing half of the company's cars globally last year. Musk has praised workers at his Chinese factory for 'burning the 3 am oil…whereas in America people are trying to avoid going to work at all.' The remark came at a time when the factory was literally having workers sleep in the factory due to Covid restrictions. Tesla has also benefited from selling cars in China's fast-growing electric vehicle market: Sales in China rose 8.8 percent in 2024, a year in which the company's global sales fell for the first time. (Tesla did not respond to a request for comment.) 'It's their second most important market and the only market that's continuing to grow,'' said Tu Le, an expert on the Chinese car market and director of the market research firm Sino Auto Insights. Along the way, Musk has developed relationships with senior Chinese leaders, notably Premier Li Qiang, China's No. 2 official, who reportedly offered him a Chinese green card during a meeting in 2019. Thanks to his real-life Tony Stark image, Musk has become something of a pop culture figure in China, as, perhaps more surprisingly, has his mother. Elon Musk books displayed during the Shanghai Book Fair 2024 in Shanghai, China. Ying Tang/NurPhoto via Getty Images The relationship between the Chinese government and Tesla has been mutually beneficial, Le told Vox. The company's investment in China came at a time when the Chinese government was trying to spur the creation of a local market for electric vehicles. That effort worked phenomenally well: more than half of cars sold in China now come with the distinctive green license plates marking them as EVs, and China accounted for more than 60 percent of EV sales globally last year. This has also led to an explosion of new domestic Chinese EV producers, including Tesla's primary competitor BYD, a company which Musk once literally laughed at but which now outsells Tesla globally. Tesla retains some cachet as a premium brand, Le says, but even in China, its sales are starting to slip. Musk is currently pushing to win approval from Chinese regulators for Tesla's 'full self-driving' technology. The company is currently hampered by rules which prevent data from Chinese drivers from being taken out of the country, which Musk says has forced them to use publicly available videos of Chinese streets to train their vehicles. Tesla last month rolled out a partial self-driving mode on its Chinese models, though it costs almost $9,000, while BYD is offering similar technology for free on its vehicles. 'China is the linchpin to Tesla's overall long-term strategy,' said Le. Musk's China ties are deeper than Tesla Musk's activities in China had attracted controversy even before he took on his new political role. In 2022, Tesla was blasted by human rights groups and lawmakers for opening a showroom in China's Xinjiang region, where the government's treatment of ethnic Uyghur Muslims had been described as a genocide by both the Trump and Biden administrations. The critics included then-senator, now Secretary of State Marco Rubio, sponsor of that year's Uyghur Forced Labor Prevention Act, who described the showroom on Twitter as an example of 'Nationless corporations … helping the Chinese Communist Party cover up genocide and slave labor.' Musk's China ties have also raised security concerns, given that another of his companies, SpaceX, is a major US military contractor and Musk himself has 'top secret' security clearance. In 2022, Rep. Chris Stewart (R-UT) pushed for closed-door intelligence briefings on Capitol Hill to determine whether SpaceX had any links to the Chinese government, telling the Wall Street Journal, 'I am a fan of Elon Musk and SpaceX, but anyone would be concerned if there are financial entanglements with China.' Several companies with links to Musk's businesses have also been targeted by the US government. In January, the Pentagon added Contemporary Amperex Technology Co. (CATL), the world's largest producer of lithium-iron-phosphate batteries, and a major Tesla supplier, to its list of 'Chinese military companies' that produce both civilian and military goods. US firms are not prohibited from doing business with companies on this list, but the list is intended to raise reputational and compliance costs. Another company on the list, the Chinese internet giant Tencent, at one point owned a 5 percent stake in Tesla, though according to media reports, it has since divested its holdings. Tencent is the parent company of WeChat, which was once often referred to as 'China's Twitter,' but has since become an all-encompassing app used for a wide variety of payments and communication. Musk has cited WeChat as a model for the 'everything app' he would like to build X into. The true extent of Musk's links to Chinese companies may not be fully known. The Financial Times reported that Chinese investors have been funneling tens of millions of dollars into Musk's non-public companies, like SpaceX, Neuralink, and xAI, using opaque ownership structures that shield investors' identities. China's man on the inside? Why does any of this matter? Musk's influence may already be helping to shape US policy toward China. At the end of last year, he publicly opposed a bipartisan spending bill that included measures to regulate US investments in China. A stopgap bill was eventually passed without the provision, with Rep. Jim McGovern (D-MA) accusing House Republicans of caving because 'Elon had a problem.' Experts say Chinese leaders are hoping to leverage their connections to the DOGE boss to influence the administration's policies. Chinese Vice President Han Zheng met with Musk on the eve of Trump's inauguration. TikTok CEO Shou Chew has also been in communication with Musk, viewing him as a conduit to the White House as the company tries to navigate concerns about its Chinese parent company ByteDance. In February, the Financial Times reported that Chinese officials were considering using Tesla's question for approval for self-driving as a bargaining chip in trade negotiations with the Trump administration. 'They absolutely see him as an asset to them in any kind of negotiations, a way to bypass Rubio, a way to bypass [national security adviser Michael] Waltz, a way to bypass those whom they see to be less friendly to them on their issues, and they're going to use him as a conduit,' Rep. Raja Krishnamoorthi (D-IL), ranking member of the House Select Committee on the CCP, told Vox at a recent event in Washington. (The White House's National Security Council did not respond to a request for comment.) The committee's chair, Rep. John Moolenaar (R-MI) didn't criticize Musk directly but agreed that 'they're going to use every bit of leverage they can.' On paper, a national security team that includes Rubio and Waltz reporting to Trump seems like a China hawk's dream. And in some respects, such as Rubio's push to keep Chinese economic interests out of the Panama Canal, it has been. Chinese officials are reportedly concerned that the Trump administration will use tariffs to pressure other developing countries to reduce their ties with Beijing. But in many respects, the administration has been less hawkish than many expected. It's true that Trump has slapped 20 percent tariffs on Chinese goods, ostensibly over China's role in the global fentanyl trade, though these are less than the 60 percent tariffs he proposed on the campaign trail, or the 25 percent tariffs he has now slapped on Mexico and Canada. (Canada and European countries have earned Trump's ire more than China, at least so far.) Trump also backed off a move to close a tax loophole used by Chinese fast fashion brands like Temu and Shein to ship to the United States, and despite having once called for the banning of TikTok, his administration appears to be in no hurry to enforce the ban on the app passed by Congress last year. Trump's foreign aid cuts have dealt a blow to dozens of nonprofits monitoring corruption and human rights abuses in China, as well as Tibet's government in exile. Statements by Trump and some of his senior officials, as well as the administration's treatment of Ukraine, have cast doubt on whether the administration would intervene to defend Taiwan in the event of a Chinese invasion. Musk has said in the past that it would make sense for Taiwan to be a 'special administrative zone' within China. In an interview in Taipei last fall, Taiwan's deputy minister of digital affairs told Vox his government was seeking alternative satellite services to SpaceX because Musk 'could cut the service [over] his personal opinion, so we don't think this was a trustable partner.' Musk has spoken out against tariffs in the past, and Tesla has warned it could be exposed to retaliatory tariffs from other governments, but because Tesla has built relatively self-sufficient supply chains within both the US and China, the measures announced by Trump so far may hurt Musk's competitors more than they hurt him. Still, if US-China trade relations deteriorate further, not to mention the sort of 'decoupling' Rubio advocated as a senator, it's hard to imagine Musk's bottom line won't be affected, or that he won't have something to say about it. 'I cannot imagine the Trump administration actually being fully hawkish on China, until Musk greatly recedes from the scene,' said Stone Fish. The administration's China policy, on both the economic and national security fronts, is still somewhat of a work in progress, and the hawks may still have their way, as they often did during Trump's first term. A test may come in June when, according to reports, a Trump-Xi summit is in the works, perhaps paving the way for formal trade talks.
