Trump & Xi - Managing the Mirage: Ann E. Kowalewski
NatSec Matters
Host Michael Allen and expert Annie Kowalewski analyze the recent summit between President Trump and Xi Jinping, characterizing it as a mix
Key takeaways
- Annie Kowal_ewski describes the Trump-Xi summit as being defined by 'spectacle and small potatoes.'
- China has successfully implemented export controls on rare earths and critical minerals to counter U.S. economic pressure.
Main topics
- Trump-Xi Summit Analysis
- U.S.-China Trade and Tariffs
Notable quotes
spectacle and small potatoes
Conclusion
The episode highlights a period of high-stakes economic competition an
Transcript preview
Speaker 3 (0:00) I think there is a genuine fondness between the two leaders, or at least there's, you know, a mutual amusement. So I think they actually don't mind meeting one another. Speaker 2 (0:12) I'm host Michael Allen with Beacon Global Strategies. Today, I'm joined by Annie Kowalewski, Vice President at Beacon and Senior Fellow at the Institute for Indo-Pacific Security. Previously, she led the Indo-Pacific Portfolio as Senior Professional Staff Member of the House Foreign Affairs Committee. Annie joins us today to discuss last week's summit between President Trump and Xi Jinping, including key outcomes and what they mean for the U.S.-China relationship. Stay with us as we speak with Annie Kowalewski. Speaker 2 (0:49) Annie, welcome to NatSecMatters. Speaker 3 (0:52) Thanks, Michael. I'm really excited to be here. Speaker 2 (0:54) Well, we're glad to have you. You're one of my colleagues here at Beacon Global Strategies, but you're also a real expert in Indo-Pacific security. You previously worked up on the Hill at the House Foreign Affairs Committee, and you advised for us and others about China policy, of course, to the policy community. to corporate America. So I think you're the perfect person for us to review last week's China-U.S. summit between President Trump and Xi Jinping. At first, let's just get to the most basic question. Why did they meet and what were they trying to achieve? Speaker 3 (1:39) That's a great question, Michael. And I think lots of folks were asking this before the meetings and even after the meeting itself. I think the meeting, you know, if we're using our typical DC policy taglines, the tagline that I created for this meeting was spectacle and small potatoes. You have... Both leaders that are trying to project an image of stability and to say that they have the relationship under control, while at the same time taking quiet competitive actions to harden each individual economy. Speaker 2 (2:09) What is the definition? Is competitive actions, is that the term that we've come up with in Washington to describe like restrictive policies? Tell us what competitive actions are. Speaker 3 (2:21) Yeah, it's a pretty broad definition, but it's generally used to refer to any type of action that we might take that either protects our domestic economy from the more malign influences of PRC economic statecraft or to kind of promote U.S. businesses over PRC businesses. Speaker 2 (2:41) OK, got it. All right. That's perfect. All right. Keep going. Sorry. Speaker 3 (2:44) Yeah. But I think both countries. Leaders really want to project this image of stability to say, look, we understand that the world is concerned about our economic competition. We understand that there's concerns about our military tensions, but we're going to project an image that we're actually friends and we're talking about it and we're managing this responsibly. Of course, it's funny because it almost has the opposite effect, at least for a lot of U.S. allies, right, where bilaterally we might have a good relationship individually with certain allies. But because of this kind of rhetorical shift that we have with the PRC, it is putting into question whether or not the U.S. is going to remain supportive, you know, when China maybe economically coerces an ally, or if the U.S. is going to continue to take the competitive actions that allies have relied on the U.S. to do to give themselves their own top cover. to take their own competitive actions. So projecting stability, but really kind of has the opposite effect sometimes. So Speaker 2 (3:44) let's tackle the big question, which is... Why does the second Trump term seem to be so much different than the first Trump term on China policy? Most people believed that President Trump really ramped up and, as you say, with measures to lessen the influence of China here, to combat their malign influence. We call those competitive actions, as you said. What's different this time around? And didn't the president come out guns blazing in the second term with tariffs and then now they're all gone? So compare and contrast. Speaker 3 (4:33) Yeah, I think there's a couple of reasons why Trump two is a little different from Trump one. One, of course, is the makeup of his staff. You know, you had a lot of very. seasoned policy professionals in Trump 1 that came in with a very, I'd say, like more conservative, typical view of national security matters than you do in this Trump administration, where you have a lot of business folks and folks outside of D.C. that were pulled into key decision making positions. Second, I think, you know, I I look at this Trump term as kind of his legacy term, right, despite what he says about. potentially running in 2028. I think there's also a sense that this is his last go around. This is the time that he can do the big spectacle things that he wants to do that he wasn't able to do in the first term. And I think that's where you get a lot of the White House renovations, the arch, the, you know, the want for these big, lavish state meetings with other competitors. All of that is, you know, goes to Trump's own personal legacy, not necessarily as policy direction. Speaker 1 (5:41) And then Speaker 3 (5:41) the third, I think, think too, is, you know, China's in a very different place than they were during Trump one, very early on in the Trump administration, China, you know, went nuclear essentially by putting expert controls on rare earths and critical minerals. And that really created a situation where now the United States is hanging under the sword of Damocles and trying to manage the worst effects of that. Speaker 2 (6:03) So that's what I want to, let's drill down on this. This feels like. maybe a misstep from the Trump administration. So it feels like in the second term, Trump is less interested in the competitive actions and more interested in trade. So he comes in and he puts a bunch of tariffs down, some on... Speaker 2 (6:28) you know, fentanyl and other things, but a lot of it came across, as I recall, on the so-called Liberation Day. I've heard it probably from you that the Chinese were a little bit confused with how to deal with Trump and tariffs in the first term, but this time they were ready. And when Trump comes in with heavy tariffs, they hit us where it hurts, as you said, with critical minerals. And those, of course, are absolutely indispensable to our economy, especially to cars. And so we got caught flat footed and in a real bind. Is that a can you critique that summary and and and embellish on it? Speaker 3 (7:11) Yeah, absolutely. At the beginning of the second Trump administration, remember, everyone in D.C. was kind of saying the term, you know, you should take Trump seriously, but not literally. And I actually think you're absolutely right that the Chinese were one of the only foreign countries to actually take Trump seriously when throughout his campaign he said that he was going to put tariffs on. And so when Trump did, the Chinese were ready to hit back quite quickly and quite effectively. I think the other realization is that. China realized after Trump won and into Biden, when Biden didn't roll back, you know, the tariffs that were put in place during the phase one of the trade deal and during the first Trump administration. That is also when I think the Chinese realized, oh, the tariffs and the more hardened economic stance that the U.S. has vis-a-vis China is not a Republican thing. This is now a bipartisan U.S. for like tenant of U.S. foreign policy. So we need to start. being serious about the toolbox that we have and developing those tools to be able to hit back at the United States. And part of that was expert control on rare earths. Part of it is, you know, being able to actually implement some of the restrictions on companies that China puts on their unreliable entity list. Some of it is hardening their own regulatory environment, like the anti-foreign sanctions law and the state council resolutions 853. So China has really been working on these tools and sharpening Speaker 2 (9:01) Yeah, Speaker 3 (9:02) so we have some of the tariffs that were still in place from phase one. We have the fentanyl tariffs, and then we have kind of other levels of tariff that are patched together through the various economic investigations that the U.S. has put forward, kind of on the 232 steel and aluminum. Speaker 3 (9:23) Some of the drones and robotics investigations. And then we have some that are still hanging out there. For example, the 301 excess capacity investigation that we expect to be concluded soon. And then the suspended 301 shipping fees, too. So we kind of have like a patchwork of tariffs that are out there. Speaker 2 (9:45) Roughly, I mean, what does that come to? Well, can they live with all of that? I mean, what are they asking us to do, to remove most of those or just keep off the excess ones that the president had previously levied? Speaker 3 (10:02) So it's interesting because at the beginning of this administration and leading up to. Liberation Day, the Chinese were signaling and messaging to the U.S. government that they can accept a 50 to 60 percent tariff. The tariffs are not actually the crux of what they are worried about when it comes to U.S. competitive actions. So we've now stabilized that a little bit. I think we're I mean, please correct me if I'm wrong, because I could it has changed quite a bit. I think we're around between like 15 and 30, depending on how you which industries you look at. And we've also agreed just recently, you know, the White House put out a statement this morning about the 30 under 30, 30 by 30 tariff reductions on, you know, 30 identified industries under this board of trade framework. Although they didn't specify what that tariff level would be yet for those. So it's a little bit squishier than we expected. But it's still very much part of the conversation. I think on the Chinese side. Like I said, it's not tariffs I think that they're really worried about. But if they are looking at tariffs, the symbolic nature of the fentanyl tariffs is continuously something that the PRC side messages because basically, you know, they are saying that they're not. The problem is not, you know, the