The Pie: An Economics Podcast
Tariffs, Trust, and the Twilight of Norms: U.S.–China Relations in the Trump Era
Apr 29, 2025
In this engaging conversation, economist Chang-Tai Hsieh from the University of Chicago explores the breakdown of trust in U.S.-China economic norms during the Trump administration. He discusses the struggles of China's post-COVID recovery and how U.S. tariffs have unexpectedly lessened their impact. Hsieh even suggests that Canada might face economic aggression instead of China. The dialogue highlights the implications of political rhetoric on economic relationships, raising concerns about global stability in an increasingly transactional world.
27:08
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Quick takeaways
- China's current economic challenges stem from both internal policy shifts and external pressures, significantly affecting entrepreneurship and job creation.
- The Trump administration's tariffs, while anticipated to be severe, had a muted impact on China and signify a shift in international trade norms.
Deep dives
China's Economic Challenges
China's economy currently faces significant challenges stemming from a combination of external pressures and internal policies. The crackdown on large Chinese firms, initiated in 2018 and intensified during the COVID pandemic, has instilled doubt among entrepreneurs regarding the stability and fairness of the Communist Party. As the party shifted its focus towards controlling powerful financial and tech conglomerates, many business leaders began to question the prospects of future growth, contributing to a reluctance to invest. This climate of uncertainty has led to a stark decrease in entrepreneurship and job creation, fundamentally altering the expectations surrounding China’s economic future.
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