Milk Road Macro China Trade War: Trump’s Deal Changes Everything (or Nothing?) w/ Brad Setser
Nov 11, 2025
Join economist Brad Setser, a global trade expert at the Council on Foreign Relations, as he unravels the complexities of Trump's trade deal with China. He dives into how Western firms, especially Apple, unintentionally boosted China's industrial power. Setser explains why currency policy may matter more than tariffs in shaping trade dynamics. He evaluates the recent deal's limitations and discusses potential paths forward for U.S.-China relations, including engagement and strategic decoupling in a world increasingly defined by AI.
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WTO Entry Fueled China's Manufacturing Rise
- China's WTO entry triggered rapid export-led growth and fueled massive manufacturing scale-up.
- That growth shifted global supply chains and created concentrated Chinese industrial ecosystems.
Outsourcing Seeded Chinese Industrial Ecosystems
- Apple and other firms outsourced assembly which taught China higher-end manufacturing skills.
- That ecosystem evolved into domestic champions and sometimes global dominance in sectors.
State Backing Turned Industries Into Leverage
- China used state support, cheap energy, and capital to dominate sectors like solar and rare earths.
- Dominance lets China use export controls as geopolitical leverage.
