# China Trade War: Trump’s Deal Changes Everything (or Nothing?) w/ Brad Setser Source: https://www.youtube.com/watch?v=2K1sWKahQFk Recap page: https://rapidrecap.app/video/2K1sWKahQFk Generated: 2025-11-11T16:11:11.473+00:00 --- ## Quick Overview Brad Setser argues that the Biden administration's approach to China builds upon the Trump administration's tougher stance, particularly by focusing on building a global coalition against China's trade and industrial policies, which he views as largely predatory and dependent on state subsidies, rather than solely relying on US tariffs. **Key Points:** - The Biden administration's approach to China is seen as continuing the Trump administration's tougher stance, focusing on building a global coalition against China's policies. - Brad Setser highlights that China's trade surplus has grown significantly since joining the WTO in 2002, reaching $1 trillion to $1.2 trillion annually, creating an imbalance. - A key element of the trade conflict involves US export controls on critical technologies like advanced chips, which China is retaliating against. - China's economic model, driven heavily by state-backed industrial policy and investment (e.g., in EVs and solar), creates competitive advantages that the US is attempting to counter. - Setser notes that Trump's initial tariff strategy (e.g., 10% across the board, later 25% on specific goods) was effective in raising stakes but didn't fully address the underlying structural issues. - The risk is that tariffs alone are not enough; the US must work with allies to create a balanced trade relationship and reduce dependency on Chinese supply chains, especially in critical areas like advanced chips. ![Screenshot at 00:01: Brad Setser begins explaining that the Biden administration's approach to China is built upon the tougher stance of the Trump administration regarding trade policy.](https://ss.rapidrecap.app/screens/2K1sWKahQFk/00-00-01.png) **Context:** The video features an interview between John Gillen of MilkRoad Macro and Brad Setser, an American economist and Senior Fellow at the Council on Foreign Relations specializing in global trade, capital flows, and international economics. The discussion centers on the ongoing US-China trade relationship, particularly analyzing the continuity and evolution of trade policy between the Trump and Biden administrations regarding tariffs, supply chain vulnerabilities, and China's industrial policies. ## Detailed Analysis Brad Setser argues that the Biden administration's China policy is fundamentally an escalation of the Trump administration's approach, characterized by the effort to build a global coalition against China's trade practices. Setser points out that China's trade surplus grew substantially after joining the WTO in 2002, reaching $1-1.2 trillion annually, which he considers an imbalance that needs addressing. He notes that Trump's tariffs, initially set around 10% and later rising to 25% on many Chinese goods, served as a tool to force negotiations but didn't resolve the core structural issues. A major current focus is US export controls on advanced technology like semiconductors, to which China is retaliating. Setser emphasizes that China’s state-subsidized industrial policy, particularly in sectors like EVs and solar, creates an uneven playing field. While the US is trying to build alliances to counter this, the underlying issue remains that China's economy is heavily reliant on exports and state support, rather than domestic consumption. He suggests that the US must be cautious about the long-term implications of escalating trade restrictions and that a sustainable resolution requires China to adjust its internal economic structure and currency management, which it has been reluctant to do. ### US-China Trade Policy Continuity - Biden administration builds on Trump's tough approach - Focus on building a global coalition against China - Tariffs as a tool, not the solution ### China's Trade Imbalance - WTO entry in 2002 led to massive surplus growth ($1-1.2T annually) - This surplus growth is fueled by state-subsidized industrial policy ### Key Areas of Conflict - US export controls on critical tech (semiconductors) - China retaliates by targeting US exports (like Boeing and agriculture) ### China's Economic Model - Heavily reliant on exports and state investment (EVs, solar) - Domestic consumption is underdeveloped relative to investment ### Strategic Implications - A weaker Yuan incentivizes exports and offsets the impact of US tariffs - China's dominance in critical supply chains (e.g., rare earths, solar) creates geopolitical leverage ### Future Outlook - Setser suggests the current dynamic is unsustainable and requires deeper structural changes from China, which it has been slow to adopt. ![Screenshot at 00:01: Brad Setser begins outlining the continuity between the Trump and Biden administrations' aggressive posture toward China's trade policies.](https://ss.rapidrecap.app/screens/2K1sWKahQFk/00-00-01.png) ![Screenshot at 00:05: Brad Setser details China's goal of building a global coalition against China's trade practices.](https://ss.rapidrecap.app/screens/2K1sWKahQFk/00-00-05.png) ![Screenshot at 00:19: John Gillen introduces the topic, questioning the actual benefits of the US-China trade deal.](https://ss.rapidrecap.app/screens/2K1sWKahQFk/00-00-19.png) ![Screenshot at 00:50: John Gillen introduces Brad Setser, an expert on global trade and international economics.](https://ss.rapidrecap.app/screens/2K1sWKahQFk/00-00-50.png) ![Screenshot at 02:11: Brad Setser begins explaining the history of US-China trade relations leading up to WTO entry in 2002.](https://ss.rapidrecap.app/screens/2K1sWKahQFk/00-02-11.png) ![Screenshot at 02:26: Brad Setser discusses the US imposing tariffs and China retaliating, noting that tariffs are a 'tool' rather than a full solution.](https://ss.rapidrecap.app/screens/2K1sWKahQFk/00-02-26.png) ![Screenshot at 03:10: Brad Setser notes that global trade was growing fast, but China's exports were growing at an unsustainable 30% per year.](https://ss.rapidrecap.app/screens/2K1sWKahQFk/00-03-10.png) ![Screenshot at 04:06: Brad Setser points out the clear pressure on the Yuan to rise in value due to China's trade surplus, which it actively resisted.](https://ss.rapidrecap.app/screens/2K1sWKahQFk/00-04-06.png) ![Screenshot at 04:42: Brad Setser discusses the US retaliating by imposing 'decent sized tariffs' on China, especially in areas like semiconductors.](https://ss.rapidrecap.app/screens/2K1sWKahQFk/00-04-42.png) ![Screenshot at 06:11: John Gillen asks Brad Setser to elaborate on the history and context of the trade dispute, referencing a new book on the topic \(Apple in China\). This sets up the detailed discussion to follow.](https://ss.rapidrecap.app/screens/2K1sWKahQFk/00-06-11.png)