Chapter 1: What are the historical contexts of the US-China economic relationship?
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Hear voices at the heart of global stories. In yesterday's attacks, my house was severely damaged. And discover the challenges faced by different communities around the world. Climate is changing in such a manner that you cannot predict. Explore the stories that are shaping people's lives. The documentary from the BBC World Service. Tell us his story.
Listen now wherever you get your BBC podcasts. Pito. Sormituntuma. Istuvus. Virtusuoja. Kestävyys. Puorellinen. Puoreton. Mukava. Miellyttävä. Vedenpitävä. Lämmin. Hengittävä. Minunkin täytyy hengittää. Sinä asetat vaatimukset. Meiltä löytyy käsine. Tegera. Suoja käsineet työhön kuin työhön.
Guys, have you ever had a relationship, friendship perhaps, that's got a bit awkward and then suddenly you've got to see that person again?
I've got to say, I don't like it when you put me on the spot like this because I feel like it's every time you and Raul look at me before we start recording.
No, no. I come from a large Indian family. Every day I'm starting on a new footing with one member of it or the other. But fortunately with you guys, I haven't got there quite yet.
So bygones being let bygones. Let's see if that maybe is one of the many themes this week as Donald Trump and Xi Jinping meet the presidents of the world's two biggest economies aiming to reset that relationship. That's today's episode of Business Daily from the BBC World Service. I'm Will Bain here in the studio in the UK.
I'm Michelle Flurry in New York. And I'm Rahul Tandon sat just next to Will in the studio.
Yes, in the last couple of hours before we started recording, guys, President Trump descending the stairs of Air Force One in Beijing, the first US president in almost 10 years to visit China. And in between, quite a lot's gone on, Michelle.
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Chapter 2: How have tariffs influenced the US-China trade dynamics?
Michelle, you talked about all the things that have changed in that decade. One word, I guess, has been with us throughout that period, though, hasn't it? Tea for tariffs.
I think I know where you're going. Yeah, I had a feeling you'd be going for T for tariffs. We've come a long way, both from the first term when Donald Trump was focused on tariffs on China. Then his second term, he sort of globalized it and put on tariffs on pretty much every country around the world. Where we are right now is... Tariffs are at around 23%, which may sound bad.
But then just remember last year, we were pretty much at an economic freeze between these two. And so what's happened is that the Supreme Court slapped Trump's wrist back in February. Then the White House dug up another rule. They kind of threw on a 10% surcharge. Last week, the lower court threw that out as well.
But in a twist, which I think you'll appreciate, Raoul, because I know you like cinema, cinematic timing, the appeals court saved it just as Trump's plane was essentially fueling up for Beijing. And so the tax is active and we carry on until July 24th when legally they expire. But of course, they are expected to be replaced.
Well, let's hear from the man himself, shall we, about how he's setting all of that out, because he's had some pretty strong words in the past, hasn't he, to say about China. This was him talking about those tariffs just last year.
For years, we've been ripped off and taken advantage of by China and others, in all fairness, but by China, that's the big one. And it's just one of those things. You know, we're making $2 billion a day right now, this country, $2 billion a day with tariffs.
So President Trump really at the kind of crux of the argument between economically, certainly between the two countries. Let's go back to their first meeting. This was 2017 at his Mar-a-Lago resort in Florida. President Xi threw an interpreter.
As two distinctive countries, our two sides may have different views or differences on some issues. This is only natural. The key is to properly handle and manage them. There is far more common interest between our two countries than differences.
Even in that 10 years, both of you, from when they first met, China's economy has grown. But there are problems that President Xi is having to deal with at the moment. You know, before we started recording, I spoke to Han Lin. I know Will knows him very well. He is from the Asia Group, very good analysis of what's taking place in China.
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Chapter 3: What are the implications of President Trump's visit to China?
It's hard to separate them sometimes.
Hear voices at the heart of global stories. In yesterday's attacks, my house was severely damaged. And discover the challenges faced by different communities around the world. Climate is changing in such a manner that you cannot predict. Explore the stories that are shaping people's lives. The documentary from the BBC World Service. Tell us a story. Listen now wherever you get your BBC podcasts.
Pito. Sormituntuma. Istuvus. Virtusuoja. Kestävyys. Puorellinen. Puoreton. Mukava. Miellyttävä. Vedenpitävä. Lämmin. Hengittävä. Minunkin täytyy hengittää. Sinä asetat vaatimukset. Meiltä löytyy käsine. Tegerra. Suoja käsineet työhön kuin työhön.
You're listening to Business Daily from the BBC World Service, where today we're pulling out what the business and economic implications could be from President Trump's trip to China with our business presenter, Ryle Tanton, here in the studio with me and our North America business correspondent, Michelle Fleury, in New York City. Now, how good are you two at packing a bag at short notice?
Michelle, you're always on the road. I bet you're better than the rest of us at this.
Look, I'm pretty fantastic at it, but the caveat being you don't mind missing a toothbrush, maybe a phone charger, some mismatched socks might be thrown in the mix.
I was going to say, I'm definitely a flapper packer. Everything just goes in. As long as I can get the zip closed, I'm done.
It's not me packing the bag. It's generally me trying to find where it is from where I left it last time.
Luckily, I think Jensen Huang, the boss of NVIDIA, the chip maker, $5 trillion valuation. I'm sure he's got lots of people who do lots of those nice things for him. Just maybe, just maybe.
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Chapter 4: How do AI and technology impact US-China relations?
Jensen Huang, because he has a slightly different view on what the US-Chinese relationship should be, was kind of notable for not originally being on the list. Jensen Huang runs NVIDIA. He sells people high-end computer chips.
And there's been a vigorous debate about whether or not the US should be selling these chips to China because there is this massive race on right now about who will dominate artificial intelligence going forward. And of course, as we know, chips are the key to that. And that's why his inclusion in this trip is so notable.
And we've seen it back and forth, haven't we, Rahul? The Biden administration, for example, banning these type of chips that affected not just NVIDIA, but European companies too, but seen that that's been a real centre of this ding-dong recently.
It's a really interesting debate because when you talk to people in China, they need these NVIDIA chips. Remember, they're not getting the main one, the fast one, the Blackwell one. They're getting the generation before that, the HV200. But the government is saying, we don't want Chinese companies to use NVIDIA's chips. We want you to develop your own and use those chips as well.
The problem is Chinese businessmen are saying to the government, those chips are just not good enough at the moment. And NVIDIA's point is, if China is relying on chips coming from the US, doesn't that give NVIDIA and the US leverage? To be honest here, NVIDIA is now, it's part of America's foreign policy, isn't it?
Well, let's hear a bit from Jensen Huang. And here he is talking about China to podcaster and AI researcher Dwarkesh Patel last month on Patel's own podcast.
They manufacture 60% of the world's mainstream ships, maybe more. They have some of the world's greatest computer scientists. Most of the AI researchers in all of these AI labs, most of them are Chinese. They have 50% of the world's AI researchers. And so the question is, if you're worried about them, what is the best way to create a safe world?
Well, victimizing them, turning them into an enemy likely isn't the best answer. They are an adversary. We want the United States to win. But I think having a dialogue and having research dialogue is probably the safest thing to do.
So you've got Jensen Huang there arguing engagement is key, as Raoul was saying, you know, they want leverage for the Americans. But there is pushback, I've got to say, from Congress. Lawmakers here say we've tried that with manufacturing. That notion of kind of leverage doesn't work. The Chinese are happy to welcome American companies in until they develop their own and then they kick us out.
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Chapter 5: What are the current economic challenges facing China?
But on that point of how they're disrupting each other, you know, Meta recently was trying to buy Manus, that company there. The Chinese said, no, you can't do that. So they're all trying to restrict each other. Can I just pick up on a point on the Cold War? Because I think this is really important.
I grew up, you know, Williams a little bit younger than me, just a little bit, Michelle, not that much. And, you know, grew up at that time with the Soviet Union and the United States in the Cold War. But this one, I think, is completely different because that was a military. That was military tensions between them, control of the world in different areas.
But they were never close economically in terms of the Soviet Union and the U.S. And I think this is what is different here. You know, China is a $20 trillion economy. The U.S. is a $30 trillion economy. That gap is enormous. He's getting closer.
So is it not inevitable that these two countries are not going to get on with each other because they are in competition militarily, influence, economy in all those areas? I mean, I'm not quite sure that they're ever going to be able to get on.
Well, I mean, I think that's at the heart of this debate, right, is they do need to find some ways to cooperate because the economy is global. Everyone gets sucked in. And that's why I think the three of us are here talking about this today. You know, this is about the US and China and how they can work together, if that's even, as you point out, possible, given the rivalry they face.
That's where AI becomes so important today. in this debate because people see it on the military side, nuclear weapons, biochemical attacks, cyber attacks. On the economic side, there's those huge productivity gains. Whoever controls this technology will have a huge leg up.
And in fact, one of the things the Wall Street Journal, there was an article saying one of the things they might discuss is an AI safety hotline, a way to try and de-escalate things if suddenly you start getting into the red hot zone.
And so as we round this out, then, and VAI is kind of the tip of the spear, if you like, of some of where the tension is, those broader issues. I mean, I was looking this week, Michelle, in the United States, bipartisan, which is a very rare thing in your part of the world, bipartisan bill coming forward. Sorry, what is that? Yes, exactly.
Coming forward between Republican and Democratic senators to try and block those Chinese car manufacturers, the likes of BYD, from being able to sell and build plants in the US. Has it now got to a point, perhaps, Raoul, first, where
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Chapter 6: How do US policies affect global supply chains?
But once this tariff war started, the US blinked and China realised they could, in some ways, call America's bluff when it came to tariffs. Now we're talking about AI. Again, I think there is this sort of same approach. How many cars does each side hold? That is a big shift from where we've been in the past. Both men want to save face, want to cut deals.
So we might hear lots of announcements about Boeing planes, as you alluded to, or American soybeans being bought. But managing the tension isn't really the same as solving the problems here. And all of this is reliant really on the personal chemistry of Xi and Trump to manage this massive rivalry that has huge consequences for all of us.
And we've talked about these gigantic companies a lot, you know, the Metas, the Boeings, you know, that work all around the world. Within reason, they can sort of ride these shocks, can't they, because of the size of them. in both countries and actually around the world in the supply chains to the smaller firms that can still be impacted.
And we thought we'd give you a little snapshot of one of those. Ethan Frisch is the co-founder and CEO of a company called Burlap & Barrel, imports spices into the United States. This is what he told us on the World Service last week.
We wound up paying close to $200,000 in tariffs under the first tariff regime that was imposed by the administration. You know, we're a small company. That's a lot of money in our budget. That's money that we are now not able to spend on buying devices from around the world. It has been a real damper on our plans for growth over the past year.
And Michelle, all three of us have spoken to so many companies of that kind of size, haven't we? People who are exporting grilling tools and barbecue tools to the United States, people importing plastic toys, even if they're here in the UK or Europe, what that's doing to the sort of wider supply chain and the wider cost there as well.
Is that somewhere that you think realistically that we could find some peace this week if they can't get somewhere on the really big stuff as you guys have mentioned?
The bar is so low that as long as this summit ends with nothing else being broken, that is what people are talking about, stability, status quo.
And I think every time there's a problem between China and the US, my friends in India, I get phone calls, great news, you know, more iPhones coming to India. On the other hand, I was meeting somebody in Vietnam and they said, look, great for our economy, you know, lots of exports have gone up, but we need a relationship with China. China. They are our biggest market. And that is the problem.
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Chapter 7: What are the perspectives of business leaders on US-China tensions?
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