Macro Hive Conversations With Bilal Hafeez Ep. 318: Brad Setser on Trump Tariffs, China’s Surging Surplus and Dollar Policy
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Jul 24, 2025 
In this insightful conversation, Brad Setser, a senior fellow at the Council on Foreign Relations and former senior advisor on trade, delves into the implications of U.S. tariffs, particularly regarding China. He discusses how companies adapt amidst these changes and the complexities of China's economic policies. Setser also highlights essential reforms needed for China’s economic rebalancing, and explores the intricate U.S.-EU trade dynamics. Additionally, he compares currency management strategies in China and Japan, shedding light on the broader global economic landscape.
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Rapid and Unconventional Tariff Escalation
- Trump's tariffs escalated quickly using unusual legal authority, surprising expectations.
- The magnitude of tariffs is significant, potentially increasing further by September 2019.
Tariffs Impact Economy With Delay
- Tariff impacts on the economy have a delayed effect, softened by companies absorbing initial costs.
- Current tariffs cause modest economic drag, offset partially by tax cuts and inventory timing.
Tariffs Disrupt Trade Norms, Not Flows
- The US tariffs disrupt global trade norms but haven't radically changed global trade flows yet.
- Executive power to raise tariffs via sanctions law marks a revolutionary, though still evolving, trade policy shift.
