Kellogg's Global Politics

Talking Trade with William A. Reinsch

• Anita Kellogg

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Trade has been a major issue for the Trump administration, and Anita recently spoke with William A Reinsch, a senior advisor at the Center for Strategic and International Studies, on all aspects of this topic. They discuss what Americans really think about trade, tariffs and why they might be around to stay, why some of our trading partners are getting extensions, and the need to work with our allies to become less dependent on China.


Another major story in the headlines is the Russia-Ukraine war, particularly Trump’s meeting with both leaders. Ryan and Anita discuss the outcome of these meetings, their unusual nature, and the chances of peace.


We also explore potential U.S. military strikes into Latin America to go after cartels and the current situation in Iran.


Topics Discussed in this Episode

  • 06:00 - Russia-Ukraine War Peace Efforts
  • 20:00 - US Planning Strikes on Latin American Drug Cartels?
  • 44:00 - Iran after the 12-day War: Still a Threat?
  • 53:00 - Interview with CSIS’s William A. Reinsch on Trump’s Trade policies


Articles and Resources Mentioned in Episode


Russia-Ukraine Peace Efforts


US Planning Strikes on Latin American Drug Cartels?


Iran after the 12-day War: Still a Threat?


Interview with CSIS’s William A. Reinsch on Trump’s Trade policies


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Anita Kellogg: [00:00:00] Welcome to Kellogg's Global Politics. I'm Anita, and I'm here with my co-host, Ryan. 

Ryan Kellogg: Thanks and glad to be here. 

Anita Kellogg: Trade has been a major issue for the Trump administration, and I recently spoke with William, a ranch, a senior advisor at the Center for Strategic and International Studies, and all aspects of this topic.

We discuss what Americans really think about trade tariffs and why they might be here to stay, why some of our trading partners are getting extensions and the need to work with our allies to become less dependent on China. Another major story in the headlines is the Russia, Ukraine War, particularly Trump's meetings with both leaders.

We discussed the outcome of these meetings, their unusual nature and the chances of peace. Finally, we also explore potential US military strikes into Latin America to go after cartels, and the current situation in, I. So summer has been winding down. I've been teaching [00:01:00] classes Becca's about to start school on Tuesday.

Ryan Kellogg: I think we're getting fully into, into fall. We did just do kinda win the big, uh, Pokemon Go events for the season, which, uh, a attract a lot of attention for, for those, uh, that don't know Pokemon Go is still going on. We're uh, we're actually constantly approached on the street 'cause we play here in Bethesda and this event, one of the bigger ones of the year had literally a hundred people out, hundred 30 people.

Is 130 people. That's 

Anita Kellogg: what they counted, at least at some point in the day. They all together had a 30, 

Ryan Kellogg: a 30 people. So yeah, you had this gigantic group walking around and we were thinking, you know, what, what, what do people think of that? It's either like a protest or you go in to, or from a sporting event or, or whatnot.

Um, people are 

Anita Kellogg: confused in the, yeah, 

Ryan Kellogg: so we, I would say at least two or three times during the event, you know, the hour we're walking [00:02:00] there, somebody comes up and asks like, what you're doing, they have say Pokemon Go, and they're like, probably thinking back to 2016. They're like, oh, that's still going on.

But yeah, I don't know. I have, I mean it still has millions of players or why Oh yeah, yeah, yeah. 

Anita Kellogg: Even though they always pointed as a trend of 2016, I mean, it's very, very active base. It's very large, and I mean, it's evidence that bethesda's not very big and it can get 130 people to an event easily. 

Ryan Kellogg: Yeah, so I think the controversy has been, so the, the original company that founded in Nantec based outta Chicago sold it recently for three and a half billion dollars.

So what's happened is there's been a lot more events and it's a lot more pay for play sort of activity going on. This is definitely that case, but it got people out in huge numbers. They're working to make back that $3 billion and probably made back like a billion of whatever. [00:03:00] Over the last three or four days.

But, uh, but yeah, it was a lot of fun even though we were disappointed by the, the main super powerful Pokemon that was the feature of the event. 

Anita Kellogg: Yeah. And then we're also excited about football season starting. 

Ryan Kellogg: Yeah. 'cause you're defending your, uh, God, I can't believe it. You won last year after a hiatus of I think like two or three years.

William Reinsch: Mm-hmm. 

Ryan Kellogg: Which, um, so this league has been going on. It's just a family and friends league, and it's been going on for 14 years now. This is the 14th season of which Anita has won half of 'em. Right. Over half of 'em then. No seven's. What you say? Seven outta 13. 

Anita Kellogg: Oh, I 

Ryan Kellogg: thought you said 14. We're going into the 14th season.

Yeah. So she's one and half, we call her Coach Belichick, which used to be a compliment. And now because of his recent situation for those that follow college football, he is now a college football coach with [00:04:00] a, uh, a very younger, interesting, pretty, uh, dominant personality girlfriend who, uh, stole a lot of the headlines over the summer.

So it's a bit of a circus. So I don't know if you'll pick up that part where you just kind of classic Belichick Classic you're going for that Senate. 

Anita Kellogg: I have all the haters like the Patriots did because everybody else, all the haters is always hating on me. 

Ryan Kellogg: Yeah. So that's a hundred percent. Back before it was dying out a little bit, 'cause it had been several years since you won, but now a hundred percent back.

Anita Kellogg: It's terrible. 

Ryan Kellogg: So, yeah, we'll see how the season goes. I know both of our college football teams are horrible. Uh, so there's basically nothing to be excited about. I think with, uh, we're excited anyway with both of them. Yeah. I mean, we're still excited, but I am very excited about the commanders. They're supposedly the sixth best NFL team in the league.

And obviously with the heroic performance of rookie sensation, Jayden Daniel's last year, expectations are sky high heading into the [00:05:00] main season. 

Anita Kellogg: Really? This is all because of me. 

Ryan Kellogg: All because of you. What'd you do? 

Anita Kellogg: Well, when I went to Chicago, they won a Super Bowl. I went la the Rams won a Super Bowl. So, 

Ryan Kellogg: well, what?

Like eight years later? 

Anita Kellogg: So they weren't even playing there that long. They weren't, it's not like the Rams were there. As soon as I moved to la 

William Reinsch: I'm not saying 

Anita Kellogg: the commanders, I was 

Ryan Kellogg: because Yeah. You did officially join the Commanders' fan base. Mm-hmm. Last year, right? 

William Reinsch: Mm-hmm. 

Ryan Kellogg: Yeah. And you so, yeah, maybe so you're saying it's that.

Maybe a little bit from Jane Daniels. 

Anita Kellogg: I'm saying I bring very good luck to teams. Okay. 

Ryan Kellogg: Well hopefully that'll continue, uh, and, uh, at least yeah. Match the performance that the Bears did when you moved to Chicago and, and make the Super Bowl. That'd be pretty good. 

Anita Kellogg: So I guess we should get into it. Yep. So first we're gonna start with the Trump Putin meeting, which was followed by a meeting with Zelensky and European leaders [00:06:00] and all that means for the status of the Russia, Ukraine war.

Ryan Kellogg: Yeah, so it's definitely been a interesting, uh, past couple of weeks where it's been a huge diplomatic push by the Trump administration in order to come up with a. Quick solution to the Ukraine event. Not exactly the 24 hours that he promised, but certainly at the beginning of this made it sound like, oh, we can get this resolved within the next couple of weeks.

So it was really headlined by the meeting between Trump and Putin up in Anchorage, Alaska. And that was fairly disappointing overall, in terms of the outcome from it, it actually ended several hours earlier than expected, but for Putin was really a huge diplomatic win. I mean, 'cause one, this guy's a wanted war criminal because of his actions and brutality and the occupied villages within Ukraine.[00:07:00] 

Between the torture which has been documented and the relocation of Ukrainian children into Russia. He's wanted by the international criminal court, but us not being a signatory member. And then obviously the Trump administration being fairly pro-Russia, he was invited to US soil and given a full red carpet diplomatic display, which included Trump greeting him on the tarmac and having a B two bomber flyover kind of in honor of Putin visiting the US for the first time since 2007.

Anita Kellogg: At least it wasn't the White House. 

Ryan Kellogg: That's true. It wasn't a full state dinner. So I guess that's, that's something. So again, the, the overall meeting there was, was kind of a dud. It lasted only a couple of hours. They didn't even stay for dinner, which included like, uh, some sort of salmon. So particularly insulting, you know, you go to Alaska and you don't even stay for dinner for the, the salmon.[00:08:00] 

But the things that, that really disturbed Zelensky and his European allies was the fact that in typical Trumpian fashion, that whoever he spoke to last, he tends to reflect their sentiments. So. Coming outta this meeting, he had dropped the need for a ceasefire, which was a provision pushed by Russia as kind of a necessity where it was rather pushed by Europeans, right?

As a necessity for potential peace deal. The Russians were not interested in that, so Trump kind of was supporting the Russian position, and then also this idea of a land swap was much more aligned with what Russia's demands were around ending the conflict. 

Anita Kellogg: You know, obviously this concerned European leaders, so it was quite extraordinary that Zelinsky was accompanied by so many European leaders, including Macron and and other European states, to try [00:09:00] to get Trump's ear as quickly as possible before his mind settled too much into what he thought this peace deal would look like.

Ryan Kellogg: Yeah, that part was really extraordinary. 'cause this, the, the meeting between Putin and Trump happened on a Friday, and then by Monday you basically had seven heads of states from the various EU countries, parachute in, uh, together with Zelensky like, uh, to the White House. So extraordinary. Unprecedented effort in order to, to help influence.

And you could tell, you know, in the meeting itself that they've learned a lot, particularly Zelensky since, you know, the disastrous meeting in the White House in February. He was much more conciliatory, made sure to thank Trump, uh, multiple times, wore a suit, which, um, you know, he got complimented by Marjorie Taylor, Greene's boyfriend, who apparently is the main reporter now within the White House, uh, [00:10:00] gets a lot of the questions.

Um, so, and then did a tour of the MAGA gift shop that lies just outside of the, uh, the Oval Office now. So all the, the merch that you can pick up when you visit the White House. And, uh, so real classy, classy event. Overall, they played much more so the, the visit itself went, uh, much better. So that. Coming out of that, there was actually more of a conversation about the security guarantees that would be required on the Ukrainian side.

So I think that's really kind of where the focus is, is the land, the territory swap kind of proposed, which, you know, we call a swap, but really it's about Russia being granted additional territory. I actually didn't find, I think there's some small areas kind of in the northern. Part of the country that a Russian occupied, but compared to the strategic significance of what Russia wants, which is in Eastern Ukraine and the Don Bosque and [00:11:00] the DTEs, there's this one area that's been about a 30 mile stretch that's been reinforced since 2014.

So when Russia first invaded the Donbass, and it's seen as a strategic linchpin for Ukraine, so it's a series of four different cities, heavily reinforced, um, you know, with the dragon teeth, with the trenches, with barb wire and the loss of that. Territory would be seen as a strategic blow because it would open up central Ukraine to potential invasion.

And so there's a, a great reluctance, not to mention the fact that it has 250,000 Ukrainian civilians still, still living within that territory. So just from the, the start, it's a kind of a non, a non-starter to give up, you know, existing territory that the Russians, you know, according to the International Institute for the Study of War, would take another three or [00:12:00] four years in order to take this, this stretch of land.

So obviously it's of great interest to Russia. It creates a nice conduit for future pressure, presumably that they can have a ceasefire and some sort of tentative agreement. Russia, of course, envisioning it as. Weakened Ukraine over time, but over the coming years, if they can get sanction relief, Russia can rebuild its army and then be much more strategically positioned to kind of finish the job with Ukraine.

Anita Kellogg: So it also made these security guarantees so interesting, which are considered Article five like protections on the table. So Ukraine would not be a part of nato, but you would have individual countries committing to sort of Article five. If you're attacked, we automatically respond, which is kind of a weird concept and nobody is quite sure how that would work.[00:13:00] 

Ryan Kellogg: And that's something that was floated out by Witkoff, kind of in his discussion with his witkoff, is Trump's golfing buddy and real estate who's basically been heading up most diplomatic efforts, not the State Department or Mark Rubio. This is all just Whitcoff having conversations with high level Russian officials.

So that's probably not worth anything. These Article five like protections, it's also not clear exactly how that would work. The most concrete effort that is happening is European led and I think whatever emerges has to be 90% EU forces. But so the UK and France have been actively meeting and, and holding military planning sessions and trying to build this coalition of willing nations within the EU to dedicate troops, uh, following whatever agreement if that's ever reached within Ukraine.

But yeah, in terms of. How, [00:14:00] you know, if Russia were to invade again, what exactly that would trigger? That's the big question. Also still. Well, it could, 

Anita Kellogg: because Article five to many people does not actually mean necessarily troops on the ground. It could means that countries are obligated to provide support, but that support can be in many forms.

So that's one of the technicalities of these sort of proposals. 

Ryan Kellogg: Yeah, so it's very unclear kind of what role the US would play in these security guarantees is something that, you know, Trump has said. Initially, particularly, again, the last thing you heard following the meeting with Liz Zelensky and EU leaders, there was kind of coming outta his mouth, talks about security guarantees, but then the next day said, well, US troops would not be on the ground.

But that does still leave open the very critical role of having the logistics and intelligence and then the idea of a backstop as well. So if Russia did [00:15:00] invade that the US would be committed to entering a more significant way, kind of a, to at least backstop European defense. So if Europe was on the front lines fighting off Russian forces, that the US would be kind of in a, at least provide troops to provide defense to NATO territory.

Anita Kellogg: How other interesting points are that necessity of EU ascension for Ukraine to be part of any peace deal that Ukraine would accept? And then also these points that, well, what was change things? What will change the two sides that seem to be dug in and nowhere near compromise? That means the US has to use some leverage, right?

And that means that the US has to be willing to escalate sanctions or increase armaments to Ukraine to communicate that Russia's army in the long term will [00:16:00] be destroyed. But as long as we just allow the stalemate to continue as it is, it's pretty much a, a win for Russia as they continue to just grind this war down.

Ryan Kellogg: Yeah, I mean, as we, we've talked about lots before. I mean, it's, um, Russia has the, the superior manpower and they're willing to sacrifice. Into this meat grinder. And then obviously there's a lot politically, domestically that Putin gains from continuing the war. 

William Reinsch: Mm-hmm. 

Ryan Kellogg: So it's really only the, the pressure which has entirely been dropped and that maybe that's part of the win that Putin got was, you know, supposedly Trump was getting tough on Russia and that they only had two weeks in order to comply and stop attacking Ukrainian cities.

Or, you know, you're gonna impose secondary sanctions on countries like India that buy Russian oil. Things like that. That fundamental things that if you did. Cut off the [00:17:00] Russian oil supply, oil revenue, nevermind kind of impact globally, but that, that would have a material impact on the ability of Russia to, to wage war.

The other thing in terms of escalation is allowing, uh, Ukraine again to strike targets deep within Russian territory and providing them the armaments in order to do so. So without that sort of escalation, yeah, you're right. Russia has no incentive to end the conflict 

Anita Kellogg: and the analysis I read, it looked a lot like signals that Trump is giving up on a quick resolution to this conflict so that things may not change.

He may not push for change anytime in the near future. 

Ryan Kellogg: Yeah, that was actually something reported in the Washington Post within the last day, that it's, he's sort of, kind of just typical of it. If he doesn't feel like he can get a quick win, then he abandons the issue. And that again goes back to the, you know, the more [00:18:00] conspiratorial sort of things that this is just about creating new cycles, which he's a master at and distracting from a lot of his domestic problems, including kind of the Epstein mm-hmm.

Uh, issue. So he, regardless, he succeeded 'cause he is dominated the last two weeks mm-hmm. You know, through these diplomatic show efforts. 

William Reinsch: Mm-hmm. 

Ryan Kellogg: So yeah, fundamentally nothing has changed. Putin still has completely Maximalist goals. As recently as June, he was basically claiming domestically within the Russian media that all of Ukraine belongs to them.

That Ukraine is not a legitimate nation state. And when you have somebody kind of with that and with such big differences between the two parties, there's actually little that Trump can do to, to force an end to the issue. 'cause on the other side of the coin, Ukraine has the ability to continue the conflict and as long as Europe is [00:19:00] willing to provide the resources, Ukraine's not gonna accept the Russian proposal.

Anita Kellogg: So yeah, it was a lot of action without any significant results. 

Ryan Kellogg: Yeah, no, I mean, I read, read some stuff where everybody. Got a little something that they wanted. Obviously we know what Putin got. I mean, that's a big Yeah. Big win for him. Trump got the, uh, oh yeah, well obviously all the visuals are always good.

Mm-hmm. Um, he had European leaders dropping everything. Mm-hmm. These are all, all leaders of their nations. I know. That's why it was so crazy. Who dropped, hopped at the drop of a hat, their schedules to fly to Washington, DC and basically grovel in front of Trump, which he loves. So he got a win from that.

And then Europe, I guess avoided disaster. Well, I guess that's something. And they're talking about security guarantees, which is, is something, I guess. Mm-hmm. So everybody got something out of it, but ultimately [00:20:00] nothing changed fundamentally on the ground. 

Anita Kellogg: You kind of brought to my attention this story that I had missed about, about Trump's plans, potential plans to begin using military force against Latin American cartels that have been designated as terrorist organizations.

Now, obviously in the campaign there was talk of doing this, but there's still questions around the legality of doing so and how Latin American leaders will respond. 

Ryan Kellogg: Yeah, so this is interesting. I mean, and most of this came out of a New York Times story from August 8th that Trump had secretly signed a directive to begin using military force against eight different Latin American cartels that had been designated terrorist organizations.

So this includes cartels like MS 13 and the Venezuelan group. The cartel of the sons have been mostly named so far. Interestingly, on the [00:21:00] Venezuelan cartel, that the administration's actually asserted that the Venezuelan president, Nicholas Maduro, is the head of it. And you actually have, uh, Rubio being quoted that he's currently indicted by the US for the cartel's, criminal narco trafficking scheme, and actually has a bounty on his head for 50 million.

I guess his bounty has actually existed for a while. It was only recently doubled to 50 million. 

Anita Kellogg: I found this quite extraordinary about Maduro. Of course, US has a tense relationship previously or a long-term tense relationship with him. I believe he is not acknowledged as the leader of Venezuela, or unless that was reversed at some point in time.

But during elections where it appears the opposition leader, one persuaded several countries including the US to Derecognize Maduro in favor of these [00:22:00] opposition leaders. So, but tying him to a cartel and as head of this cartel is something that seems very new at development and definitely has interesting implications.

Ryan Kellogg: Yeah, no, I, I, I thought the same as well. Um, and the, the New York Times article, I pointed out, you know, some of the, the historical precedents that aren't directly like this, but are somewhat similar. And I had, I had personally forgotten the details. We were the same age in 1989, but this is probably. The first action by the US military that I had like a memory of and watching on TV at the time.

'cause I think CNN, we had gotten CNN probably by this point in 1989. But yeah, so the US sent, for those not familiar, they sent 20,000 troops to Panama to arrest Manuel Noriega who had actually been indicted in the [00:23:00] US on charges of drug trafficking. So you have a head of state of Panama that had been indicted on, on criminal charges, on drug trafficking.

And that was actually the legal authority. It was actually William Barr, a younger William Barr. Yeah. Was the former attorney General under the first Trump administration. Drafted this at the time. For President George HW Bush, that gave them the authority to direct law enforcement arrest of fugitive overseas without the consent of foreign states.

Now, the action was condemned at the time by the un, but was essentially sending 20,000 troops to arrest. A foreign head of state. So maybe that's kind of the, the precedent and, and the legal authority is, it's wasn't just controversial internationally, it was also controversial within the us So it's not something, I guess legal scholars agree upon that the president can actually do this.

But I'm imagining this [00:24:00] is combined with the fact that they've classified the organization as a terrorist organization, as seen as giving much more or legal leeway in terms of the, using the defense department in order to, to implement these actions. 

Anita Kellogg: So yeah, your points about Noriega are interesting.

Unlike you, I must be significantly younger by the whole three weeks. That 

Ryan Kellogg: whole three weeks. Yeah, because I 

Anita Kellogg: did not watch it on television. I only have deep. Faintest memories of the name of Noriega, but not really any context to details. So I think it is interesting to compare that to the possibilities Trump may be talking about today.

What I remember about Noriega the most is the lasting controversy over it in political circles. 

Ryan Kellogg: Yeah, yeah. And I, of course, as a kid, I did not pick up on any of these nuances at all. I remember, I remember 

Anita Kellogg: the controversy. 

Ryan Kellogg: Oh really? You remember it? 

Anita Kellogg: Yeah. Like I don't remember seeing [00:25:00] on TV or any details of it.

Yeah, I just remember that being like a thing that people had very different opinions on. 

Ryan Kellogg: Oh, okay. The only thing I remember is it was explained by my dad, 'cause I at the time was a big fan of GI Joe, and he was basically like, Noriega is like the Cobra commander, who's the head bad guy, also head of a terrorist organization.

He wasn't involved in drugs though, even though this was the peak, like Nancy Reagan wore on drugs. And then I remember that in order to. Because they had surrounded the presidential compound and they started playing like loud music. And I only remember like watching that like the troops are just like playing loud.

Wow. Like heavy metal music or something to annoy Noriega. And then eventually they, they arrested him. But yeah, I don't remember any of the controversy. I just remember those two things. 

Anita Kellogg: I'm just fascinated by your dad explaining this theory GI show analogy. Why? What is it the GI Joe That makes sense. You know, it's 

Ryan Kellogg: GI Joe is basically US [00:26:00] special forces.

So.

So, I mean, and obviously the US has other actions around, particularly on this war on drugs that continued through the eighties and nineties with US military assisted activities in Columbia and Peru. And I know you've, you've studied Columbia quite a bit, the Columbia plan, and did you wanna add any kind of detail about kind of US' efforts and what They're certainly more constrained than what we did in Panama.

There weren't like US troops actively, you know, battling FARC or the, the drug cartels. But it was, we certainly provided a lot of assistance. 

Anita Kellogg: We had like at least 2000 troops, I think 2000, 3000 troops. Oh, so was that, 

Ryan Kellogg: was that for training purposes though? Like training Colombian special forces or? 

Anita Kellogg: I think mostly in support roles.

Ryan Kellogg: Yeah. 

Anita Kellogg: But very significant presence. I mean, there's a huge difference though. Columbia came to the US begging for those troops. Right? Right. I mean, it wasn't even the US saying, [00:27:00] oh, we'd like to work with you. It was Columbian saying like, we are a failed state. The only way we can get our country back is if we have your support.

Now, they were also asking for economic support, but they just got the military aid, but it made a big difference. But I think this is a totally different thing. 

Ryan Kellogg: Yeah, I think yeah, in terms of what's being proposed. Yeah. Very different. And I think the, the controversy comes back and it, because it really puts the military in this role of directly capturing or killing people involved in the drug trade.

Oss terrorist organizations normally have political goals and, you know, one of the, the key differences that was laid out by the Washington office on Latin America is that, you know, criminal organizations are motivated by profit. And they often work hand in hand with the government in which they corrupt through bribes, which is a huge problem, you know, throughout Latin [00:28:00] America and, and Mexico in, in particular.

I mean, it's the cartels deeply penetrate, you know, local municipalities and states paying off local police, paying off mayors, paying off higher federal government officials. So it's a real issue that's very different than a counter-terrorism operation, like against ISIS or something. Right. 

Anita Kellogg: Now some of these have been terrorists, like FARC was a terrorist organization with other Yeah, they had political 

Ryan Kellogg: goals.

Right. I mean, it was a Marxist leftist organization that had political goals against a either a far right or a, a central Right. Government within Columbia. Right. 

Anita Kellogg: So I just, that's another difference. The thing, you know, that I'm just thinking about in all of this one, I'm still really intrigued what will happen with Venezuela, but for the rest of these countries.

You are going in, not necessarily with their permission to enter. Is what I'm hearing, or is it assumed that they'll make negotiations get so that the country is [00:29:00] approved? 

Ryan Kellogg: You get kind of a mixed view on that, but I think the, the Atlantic Council had a nice report. So there is, I mean there is significant cooperation between the US and Mexico, even though.

Mm-hmm. You know, a lot of the rhetoric is kind of framed around and certainly how it was framed like during the presidential campaign is that we're gonna just do these special forces strikes right. On Mexican territory and the hell with what Mexico thinks. But in reality, we actually have an agreement that was approved by the, the Mexican Senate this year that approved the presence of the US Army's seventh Special Forces Group, and they're conducting joint training with Mexico's special forces s And I think the unique thing, you know.

There's certainly a lot of complications and a lot of corruption within many areas of the Mexican military that may make this sort of operation [00:30:00] difficult. But this particular Special Forces group, at least according to the Atlantic Council, was seen as as a trusted partner within it. So I think what was a vision is that if there were going to be targeted strikes, it would be in conjunction with Mexican Special Forces.

Anita Kellogg: Yeah, that makes a lot more sense to me. I wonder if this is any part of the trade negotiations with Mexico, which recently got a 90 day extension, or if not directly part of the negotiations, which I doubt would be. It's. Somewhere in the talk under the table. 

Ryan Kellogg: Yeah. No, I think it is, it's definitely being used as leverage and it's something that 'cause the US is seeking much greater latitude and the ability to strike these cartels and it, it goes back to the original, I mean, even Canada was caught up in the fentanyl trade.

Very small, right? Yeah. But it's, it was used as the main excuse. It's like, well, fentanyl's getting into the US and it's large. I mean, 95% of it's coming from Mexico. Yeah, it's 

William Reinsch: very small. And then five 

Ryan Kellogg: percent's coming [00:31:00] from Canada, but it was still being used as a leverage item, as part of trade negotiations as well.

Anita Kellogg: Yeah. Right. 

Ryan Kellogg: Yeah. 

Anita Kellogg: Which is not gone as well. Between 

Ryan Kellogg: Canada and the US Uhuh, no, that hasn't gone, gone well at all. So it's kind of interesting. I think the other thing the Atlantic Council pointed out was it'd be the Sinaloa cartel would likely be the first target, and that's because it's, it's the most powerful cartel in the Western hemisphere and engages in beyond drug trafficking.

Also has human trafficking, illegal mining, illegal oil sales and business extortion, and also has deep ties to China. Mm-hmm. Via the fentanyl trade. So this would be seen as the likely target for any initial action by the us. So it definitely seems like something is, is building up. Around this. The other thing bringing Venezuela back into it is you had a series of warships that [00:32:00] were deployed off the Venezuelan coast.

This is shortly after kind of the announcement of doubling the um, uh, reward for Maduro's arrest and capture. And I think that probably goes back to your point is like, is there some sort of greater end game? Because this is definitely one of Rubio's passion projects, right? Beyond like Iran, which is, you know, we'll talk about, uh, shortly and, and has largely been neutralized.

Venezuela is definitely something Rubio and regime change is, is something that is certain passion projects. So having that Noriega comparison, I can't imagine Venezuela's military pretty's capable. That's what I 

Anita Kellogg: was just thinking. Like it's, I, because literally when you talked about warships, I was like, oh yeah, this is not Panama without a military.

Right. Venezuela has a significant military. 

Ryan Kellogg: Yeah. Yeah. And that, and I was reading a report. I mean, Maduro, as a result of this action, has activated the 4 [00:33:00] million militia members. Mm. Now how capable is this 4 million still? It's 4 million men under arms. Yeah. So it's not something where you're gonna walk into Carus and be able to, to lay siege to the compound.

Anita Kellogg: And these are the only people really getting food. So they are very dependent on the state and pretty loyal to the state. 

Ryan Kellogg: Right. So Yeah. 

Anita Kellogg: You can't just send in 20,000 troops. Yeah. 

Ryan Kellogg: Which isn't, isn't the US provision as of late. 'cause I think the, the other interesting thing that's kind of been bubbling up is just the use of special forces is actually a lot wider than I think is, um, fully understood.

Probably since Obama onwards, just because the negative impact of the Iraq war, the Afghanistan war, the commitment of huge amounts of troops. But the US has been leaning more and more on the use of special forces to carry out operations. Now, I can't imagine Maduro. Yeah, I don't know. I [00:34:00] don't, well, 

Anita Kellogg: that's a huge violation of not only international law, but just precedent.

I mean, you can't assassinate other national leaders. How 

Ryan Kellogg: is it different than what Trump did with Soleimani? 'cause Soleimani was, 

Anita Kellogg: he didn't, 

Ryan Kellogg: he wasn't a national leader, but they, we, yeah, we assassinated not head 

Anita Kellogg: of state. 

Ryan Kellogg: Yeah, okay. We cannot, but it's not recognized as a head of state. Everything that is being set up, we don't recognize him.

Head of state. He's head of a cartel. 

Anita Kellogg: He's still a defacto head of a state. 

Ryan Kellogg: Yeah. But we don't care. We don't recognize it's the, the guy, the opposition leader that was elected. We recognize him as the head of state. I'm not saying this would be, this would be the biggest special odd to be able to pull this off would be pretty extraordinary.

But is it building this, something like this where you're, you're, how 

Anita Kellogg: would be the second biggest violation of international norms the 

Ryan Kellogg: biggest? Who's gonna do anything about it though? 

Anita Kellogg: I mean, [00:35:00] it's on par with Russia invading, you know, for territorial. No, it's not 

Ryan Kellogg: on par with that. In terms of 

Anita Kellogg: international norms, not assassinate, of course it's appealing to assassinate political leaders all the time.

There's a firm rule that you cannot assassinate a political leader, and by that I mean head of state. 

Ryan Kellogg: Head of state. 

Anita Kellogg: Yeah. Not, not other. Yeah. 'cause we, 

Ryan Kellogg: as we constantly, yeah. People have significant political power, right. Within their 

Anita Kellogg: Right. I'm not talking about that. I'm talking about heads of state. 

Ryan Kellogg: But this is now a terrorist organization.

This is a head of a terrorist organization, is how the White House is framed it. Not only is he not the head of the nation, state of Venezuela, he's also the head of a drug cartel that has now been designated a terror state. So this is now the equivalent of just going after the head of isis, which we absolutely do and have a track record of assassinating these people.

Anita Kellogg: So, yeah. But you ca I dunno, [00:36:00] he's so the fact that it's also, what is 

Ryan Kellogg: the blowback gonna be? 

Anita Kellogg: It would be huge. I mean, I don't know what people can do about it, but I'm telling you, there's been a lot of terrible political leaders, uh, heads of states that we have hated and detested and we did not assassinate them.

There is precedence for arresting them, but there's absolutely no precedent in the post-war War II era of a, of state ever being assassinated. It opens up the whole countries then start trying to assassinate each other's leaders. I mean, there's a reason why that precedence exists. 

Ryan Kellogg: This is very unlikely event, but it does raise kind of the questions on, I don't think can rely on special forces on, on engagement.

I mean, let's, well, I mean, I think they are going back to like Mexico or any of these cartel actions, right? I mean, it's gonna be the action of special forces and I think even, even legally there. But were, we were talking about Venezuela. Yeah, I know, I know. But this all kind of ties in 'cause they're all, it's, this is the whole point is that [00:37:00] everything's being.

Venezuela is now being grouped as a drug cartel. Maduro's, the head of a drug cartel, according to the White House's definition of which is now a terrorist organization, 

Anita Kellogg: but he is also a defacto head of 

Ryan Kellogg: state, not recognized by the United States, though, 

Anita Kellogg: I mean, I think wasn't a Syrian leader, Assad, wasn't he considered, wasn't that considered a terror state?

We definitely have. Oh, I don't know. Yeah, I don't know if that was fully, yeah, definitely have countries that are designated as terror states. You still can't assassinate their leaders. 

Ryan Kellogg: Yeah, but I think there's a difference between like, no, we still recognize them as a head of state though. What I'm saying is that not only, it's not, it's the terrorism plus, we don't recognize him as legitimate leader based on that last election, 

Anita Kellogg: but that's pretty flimsy.

Ryan Kellogg: We've gone to war.

Anita Kellogg: Again, we have to go say, we're 

Ryan Kellogg: not gonna do that. It's all okay. We're carving the world back into spheres of influence. This would be seen as an alpha move [00:38:00] action to reassert the Monroe doctrine. That's just what it is. Just kind of interesting seeing them trying to build up these flimsy legal pieces in order to what justify.

These potential future actions of which obviously the military is being used for purposes that it wasn't really originally intended. I mean, we're seeing that domestically a lot. 

Anita Kellogg: Did you point out there's a constitutional law or There's a law 1878 law called 

Ryan Kellogg: the Posse Commentators Act that makes it 

Anita Kellogg: illegal to use the military to perform law enforcement functions.

And that's been very controversial here in DC Because you're not supposed to use the military for law enforcement. 

Ryan Kellogg: Yeah, and I obviously don't care, so I'm saying why is anybody gonna care for like Venezuela? 

Anita Kellogg: I'd be floored if that happened. 

Ryan Kellogg: Yeah, I think just because it wouldn't be easy to do execute necessarily.

Anita Kellogg: We could have [00:39:00] gone after leaders with the CIA for a long time. Did we just don't do that. 

Ryan Kellogg: We did in the fifties and sixties. Used to be like regular practice to South America. We would, yeah. But going, going back, I mean I think there are a bunch of interesting legal president, 'cause even going to a much lower level does the military, does special forces have the right to just execute cartels.

And I think that was the whole idea of the terrorist organization. 

William Reinsch: Yeah. 

Ryan Kellogg: Because the idea was like, well, yeah, if they're gonna do law enforcement, they'd have to try to detain them unless they try to use lethal force against 'em, in which that case they have a right to defend themselves. It's all kind of messy.

But I I'm thinking this is the reason you designate them as a terrorist organization. Mm-hmm. Then you have the leeway to just go in and kill them. Yeah. Without much I do. Yeah. So, yeah, it just stood out to me. I mean, it's gonna be interesting. It definitely seems like they're moving forward. You could see it [00:40:00] politically, domestically, plain.

Well, I mean, who, how does like killing drug trafficking, human trafficking, criminal groups not popular. It's gonna be popular 

Anita Kellogg: as long as they don't do something like try to assassinate mado. 

Ryan Kellogg: That That would be, 

Anita Kellogg: that will not be, yeah, 

Ryan Kellogg: that would be, yeah. No, no, no. I think that gets, that gets extremely ugly.

That seems really ambitious, but it's like, what is the end game? By doubling his reward, sending destroyers, what's kind of the point of doing this unless something's kind of building towards, you think you can have regime change or decapitate the Venezuelan regime. I dunno. 

Anita Kellogg: That would be a huge stake on so many levels.

Ryan Kellogg: And the whole point of this, and, and I think even with the drug cartels is it's extremely ineffective, you 

Anita Kellogg: know? Right. It's like whack-a-mole. Right. You e 

Ryan Kellogg: Exactly. Yeah. They're just gonna move the, [00:41:00] they're extremely flexible organizations. They're driven by economic incentive, as long as there's demand, and there's always gonna be demand because people wanna dissociate from their lives within Western countries, particularly the United States, where unfortunately life is really hard for a good chunk of the population.

So there's always gonna be demand for drugs, and these cartels are always gonna fulfill that demand for drugs. 

Anita Kellogg: Yeah. I mean, that's the whole thing. As long as there's demand, there will always be people providing it. So you break up one cartel. Well, they're competing cartels. They just become the main cartel.

Then they just have, they get to bribe the politicians and set up their organizations. 

Ryan Kellogg: Yeah, 

Anita Kellogg: I mean, I, I mean there's always somebody right there. It's not even like, oh, and New cartel has to form. There are all these competing cartels and it's just like one takes over from the other. 

Ryan Kellogg: I'm thinking the best outcome is something like with Columbia Columbia's cocaine [00:42:00] production.

Is that like record highs? It's much higher than it was under Escobar. 

William Reinsch: Mm-hmm. 

Ryan Kellogg: Famous Escobar, who, who nearly challenged the power of the Colombian state. Mm-hmm. Very centralized control of, of cocaine production. And, you know, he was taken out. But now, you know, cocaine production is, is higher than it was during that period, but it's very decentralized.

It's much more, uh, competitive market, I guess. We just have a lot more smaller producers. That's all that's gonna happen to Mexico. You'll have just as much product coming out. It's just gonna be decentralized, which is probably good from a corruption. Nation state standpoint. See, I'm 

Anita Kellogg: not even sure It'll just be smaller producers, I think.

Ryan Kellogg: You think it'll just be, it can reconstitute itself. Well then it becomes a whack-a-mole where you're just, that's what I'm doing. It kind of the same with terrorist organizations like you. We've constantly had to kill Al-Qaeda leaders. 

William Reinsch: Mm-hmm. 

Ryan Kellogg: But we've kept it from like building to the point where it could take over a nation [00:43:00] state again.

Right. Like isis, 

Anita Kellogg: I guess if you keep at it, you can weaken them, but you're not gonna get rid of them. 

Ryan Kellogg: Yeah. You're never gonna get rid of 'em. And I, and you have 

Anita Kellogg: to maintain that same military involvement continuously. If you say, oh, we're done with this operation, we're gonna go home, then you, then that's when you just have the new major cartel for me, who's doing all the bribing and 

Ryan Kellogg: yeah.

So it seems like the, I mean, the best play is something similar with like a. Plan Columbia, if you're gonna do that with like Mexico, let's just focus on Mexico. But it's not gonna get rid of the drug trade. No, you're never gonna get rid of the drug trade. But the whole point is that you can you slowly, every time Likert the Mexican state, or at least minimize the, I mean, 'cause it's not like Columbia's clean, right?

But could you, at least at the federal level, keep that relatively clean where a cartel firm gaining so much power that it literally can reach into the upper echelons of, of the government? 

Anita Kellogg: That's a good [00:44:00] question. I don't know. 

Ryan Kellogg: Yeah. So I think the idea of like our special forces training them, you have this high level of cooperation.

You do these targeted things to maybe break up bigger cartels, but this whole idea of doing something without the express approval of the Mexican government is just stupid. Right? Let alone the Venezuela stuff, which is probably just way out there, and that's probably real stupid. 

Anita Kellogg: Very, I don't actually see that happening, but I've been surprised before.

It'll be interesting to see how this develops. More so just to kind of conclude, you brought up what is happening with Iran now that the 12 day war is over. There's been no discussion. It's not in the news yet. It still has some capacity probably to be working toward an eco weapon. 

Ryan Kellogg: Yeah, and this would be a pretty quick update.

I mean, I, I was just curious myself because it has kind of really fallen outta the new, you had this very [00:45:00] dramatic 12 days. You had the, the US LED strike and then Yeah, and then the, the cessation of, of hostilities. So it was like, well, what, what's going on? So it was interesting. So I mean, the International Atomic Energy Agency came out with kind of a neutral third party assessment, and they determined that Iran's enrichment capability has been heavily degraded and fully incapacitated.

That, that being said, that that has to do with their enrichment capability. They had a lot of already rich components in stock. So the thought was that, um, many experts think that Teran could recoup and rebuild its losses over months or a few years, and that really the core components such as the enriched uranium and centrifuges that were not installed at the time of attack.

Probably survived the strikes and could be redirected towards a crash program to develop a nuclear weapon within a [00:46:00] year. So I think that's ultimately, you know, wasn't that everything was obliterated like the Trump administration said, but it was set back significantly. But obviously we talked about this before, the Iranian regime has complete incentive now to develop a nuclear bomb as quickly as possible.

William Reinsch: Mm-hmm. 

Ryan Kellogg: Because the other thing that's really emerged is that, you know, it's, it's lost everything in terms of its proxy ability with the exception of the Houthis. Right. We kind of threw that 

Anita Kellogg: there because we kind of gave up attacking the Houthis. 

Ryan Kellogg: Yeah. 'cause that was such a big deal. And of course you had the scandal with the, uh.

Signal Gate? No, what was that? Oh, 

Anita Kellogg: yeah, where they were, where they discussed the details of an attack on the Houthis, on the Signal app. 

Ryan Kellogg: Yep. Yeah, so we had over a thousand different strikes, but then all of that wrapped up. Actually about accomplishing anything before, yeah. Before all of these events cost, I don't know how many, tens of [00:47:00] billions of dollars.

Well, that's why we stopped because we were running outta, 

Anita Kellogg: yeah. We were depleting our these expensive missiles without really accomplishing anything. Accomplishing anything. 

Ryan Kellogg: Yeah. So then literally two months later, the Houthis struck two different ships. The Red Sea and I, I guess kind of the, and this is from an economist article back in July.

'cause I had missed this completely. This was actually in July when this happened. The world actually did, it didn't make much note of it. Mm-hmm. Uh, and I think again, most shipments for Western shipping companies now go around the Horn of Africa. Right. And do it. And we just kind of built that in. And, uh, to, to the cost structure.

The ship that was struck was actually a Chinese, I think it was, um, shipping stuff from China to Turkey, but because it went to Port and Israel, and again, the Houthis, at least in terms of how they communicate, uh, this is all and support of what's going on [00:48:00] in Gaza, which of course is horrific. But we'll continue attacking vessels as long as, as long as the Gaza situation doesn't improve.

But that's the only proxy that has Iranian support. And clearly there's still somehow getting armaments from Iran that's active. 'cause even Iraq, who's obviously right next door to Iran, another economist article talked about how much that it has been weakening over time. And, and you actually saw it during the lead up to the US bombing campaign of the nuclear facilities as Iran actually was trying to get.

It's Iraqi proxies to attack us bases. Mm-hmm. And they weren't willing to do so. Mm-hmm. So, I mean, obviously Iran's been, its proxies destroyed. It was left out in the cold by its allies, Russia and China. It's in this very weakened state, but it has been able to consolidate. Uh, you know, obviously there's no viable [00:49:00] political opposition within the state, but it has been cracking down internally.

So looking for people that were particularly intelligence leaks to Israel. 'cause obviously Israel had completely compromised Iranian intelligence, so there's been a number of arrests and executions around that. And then I think domestically committee is seen as being in very poor health. So there is work on trying to find, you know, succession for him.

So it's like the, the state and the structure, which we talked about before, is such that they're gonna find another, there's no challenge to the Islamic. Regime and that's a complicated enough of an organization that taking out a single individual where lots of individuals like Israel did. Mm-hmm. In these strikes, it still has the ability to reconstitute itself and there's no other game in town.

So there's no fundamental change from that. It's just Iran's in a weakened state and it [00:50:00] has a hundred percent more incentive to build a nuclear weapon as quickly as possible. And it's in the position we think to do so. 

Anita Kellogg: Yeah. So it'll be interesting. I don't know, to see what develops. 

Ryan Kellogg: It, it puts the onus on can Israel continue to have just complete ownership of the intelligence environment within Iran.

Mm-hmm. So that it knows as Iran goes fully underground with its nuclear kind of crash program, can Israeli intelligence identify it and then have additional strikes to prevent this weapon being built? So I think that's gonna be the game going forward. There's other stuff about potentially another deal in a, would Trump try to in, you know, reconstitute the nuclear deal?

Hmm. But my thought is like, why would Iran trust the US at all in any of this? And why is that more incentive than I. [00:51:00] Other than maybe sanction leap, I wouldn't trust Trump on that. Uh, I think, 

Anita Kellogg: you know, the play now for Iran is to allow Trump to think he want. I mean, this is the whole idea of what we don't hear about it.

Trump is like, to his followers, we won. This is a 

Ryan Kellogg: total victory. Yeah. We frame that way so we don't 

Anita Kellogg: have to worry about Iran now and Right. As long as Iran stays fairly under the radar, then it could potentially develop this nuclear weapon without, you know, having too much interference from the us. But like you said, Israel intelligence is 

Ryan Kellogg: deeply penetrated the Iranian state.

Right. So it seems, 

Anita Kellogg: I don't think that they'll really be able to do that either. 

Ryan Kellogg: Yeah. Unless they're counterintelligence operations become a lot more effective than they have been. 

Anita Kellogg: Yeah. It's hard to imagine that happen. 

Ryan Kellogg: I can't imagine. Yeah. They just seem very weak and, and competent, so I, I can't see that improving dramatically.

So yeah, you saw a little bit of a rally around the flag effect within Iran, so yeah, no, no imminent [00:52:00] collapse of the Iranian regime by any. 

Anita Kellogg: Well, finally, we have my interview with William Raj at CSIS, so he's an economics expert, and we talked about all things related to trade, as I explained in the intro.

So as I teased, you know, sort of about what Americans really say about free trade, the popularity or not of tariffs, their effect on inflation or not. Also, I thought it was interesting, you know, we talked about Trump can levy tariffs without Congress, so could the next president get rid of them just as easily, but how that would actually be really hard to do due to the revenue that they're bringing into the US government.

We also talked about China dealing with that either through terrorists versus industrial policy and the importance of allies, right? So this idea that we, despite what the Trump administration seems to emphasize, that we can make everything in the United States, the [00:53:00] practicality was we cannot. So why does the US not put any emphasis on French horing as a solution to reducing our dependence on China?

We talked about all these topics and more, and I think you'll really enjoy the interview and some expertise on some of the main issues of the day. Welcome to Kellogg's Global Politics, a podcast on current events in US foreign policy and international affairs. My name is Anita Kellogg. I'm here with William Reich, a senior advisor and scroll chair, reti at CSIS with expertise of all things trade related.

Hi Bill. Thank you so much for coming on the show. 

William Reinsch: Happy to be with you. Honored to be invited. Oh, 

Anita Kellogg: well it was such a pleasure. There seems to be a dominant narrative. The free trade was an idea sold to Americans by elites who ignored how it affected the middle class through the loss of well-paid manufacturing jobs.

Is there any truth to this perspective and how does it impact the current global [00:54:00] trading system? 

William Reinsch: Well, it's been an element of debate for a long time, and it's part of it is a case of the left and the right ganging up and shooting the. Which, uh, happens a lot in the trade business. The Biden trade narrative was that global economic integration, globalization has not helped workers.

It's helped big companies and their CEOs who responded to it by basically offshoring jobs and manufacturing to other countries, and that we needed to have a different approach. The Trump narrative ends up in a similar place, but with a different villain for Trump. Um, it's the evil foreigners that are stealing our jobs, undermining our economy, and compromising our national security.

He doesn't attack American companies as much, uh, as the Biden folks did. Mm-hmm. But he ends up in the same place, which is that trade has not served the country well. If you look at, uh, poll data. It [00:55:00] shows the opposite. For the most part, Americans are largely supportive of the trade and supportive the trade agreements, it fluctuates, but it's consistently been in the 60, sometimes 70% range.

It varies over time by party. Currently, there are more Democrats to support trade than Republicans. That hasn't always been true, but currently that is the Republicans are heavily influenced by, uh, by Trump. But I think if you drill down into the debate in into the poll data, there is some, uh, I guess cognitive dissonance, meaning the ability to hold people to hold conflicting opinions.

At the same time, while people will say they support trade, the trade is good. The trade provides more consumer choice. The number of people that say it lowers prices is positive, but smaller. And the number of people that say it costs jobs. Are greater probably mm-hmm. In the majority. [00:56:00] So people can support it, but at the same time recognize that it causes problems.

I think the fundamental issue has always been with trade, that the gains tend to be, uh, long term and diffuse, and the losses tend to be short term and specific. So your T-shirt is 1299 instead of 1599 because of trade. Mm-hmm. Uh, you probably don't notice, but it's one of those things in the long term, the economy grows, more people make more money.

There's a mountain of data dating back 30, 40 years showing that companies that engage internationally, whether they're exporting or in importing, are more profitable, hire more people, pay their workers better, and provide more benefits than companies that are not engaged internationally. So that's all sort of long-term macro data.

You know, if you're working in a, in a, a steel [00:57:00] plant 

mm-hmm. Uh, 

and the plant closes, you blame imports and you blame foreigners and you've lost your job and you're probably in a community where there aren't a lot of other alternatives. And so there are short term losses that are very specific.

Foreigners may or may not be the villain in that case, but you'll blame them anyway. So you create over time, we've created a constituency of people who perceive that they've suffered from trade, and obviously I an interest in, uh, writing those wrongs. The irony of that is that if you listen to both Trump and Biden, when they talk about trade, most of the time they're talking about manufacturing.

Even though services are 75% of our economy. And when they talk about manufacturing, they tend to talk about old manufacturing. Heavy manufacturing, steel, automobiles, machinery, things that involve metal. I did a column once based on the [00:58:00] Ronnie Millsap song. If you're a Country Western fan lost in the fifties tonight, and they're both lost in the fifties, I mean, Trump dreams of a world where we make basic stuff that we haven't made in volume for a long time, and he wants to reshore that.

We'll see what happens. It's hard to imagine him being able to reshore a lot of that at competitive prices. So what it means for consumers over the long term is higher prices, less choice, and probably poorer quality. So we'll see. 

Anita Kellogg: So it is true though that data shows that there is decline in the type of jobs that manufacturing used to provide, right?

Good jobs that you didn't need a college degree and they were, as you kind of said, they were the losers. And the decline has been really steady since the 1970s. But sharpened, um, after 2001, when [00:59:00] China became part of the WTO, is there some way to have an open trading system yet renew industries that could potentially provide good jobs that don't require a college degree?

William Reinsch: Well, Trump thinks there is. That's what we're embarked on. So I guess we'll find out. If you look at the data manufacturing jobs in the United States, peaked in 1970 and they've been declining ever since, and right now they represent about 8% of our employment. That's not a lot. And we're spending an enormous amount of time focused on a relatively, uh, small part in terms of jobs of our economy.

You know, if you wanna do that, that's fine. I think what we're learning in terms of workforce development is there's a lot of jobs that don't require a, a college degree, and they're not all factory assembly line jobs. There are plenty of jobs in the service sector and, and goodwill paying jobs [01:00:00] that don't necessarily require college degrees.

We did a study of this a few years ago and concluded that one of the problems in, in hiring was, was sort of qualification inflation. Uh, and employers tended to require when they, you know, send out notices, hiring notices, they tend to have criteria that include bachelor's degrees, where an analysis of what the job actually requires, suggest that that isn't really necessary.

And I think we're going through a period now where people are coming to understand that and are designing their job qualification standards to be, to fit more appropriately for, uh, for the actual skill requirements of the job. Keep in mind too, that a lot more of this has to do with technology that we've been talking about.

Mm-hmm. I mean, economists will tell you that the biggest reason for the manufacturing job decline is productivity improvements and technology [01:01:00] in the heavy manufacturing sector, in automobiles, for example, a lot of it is really the replacement of human beings by industrial robots. Mm-hmm. Uh, and go to a plant, you'll see that, you know, there's a joke about the modern textile plant, not apparel, but te people will make claw the textile plant that the modern textile plant has only two employees, a man and a dog.

And the man's job is to feed the dog. And the dog's job is to keep the man away from the machines. And that's not entirely inaccurate if you go to a modern textile plant. But keep in mind, the things that enabled globalization in the first place were technology improvements, enormous reductions in the cost of transportation and communication.

These days, more than 60% of our cut flowers fresh are imported mostly from Columbia, but also from Israel and the Netherlands, to name two others. [01:02:00] That was just physically impossible 50 years ago. Now we have planes full of flowers that fly here every day to supply the market. Containerization, uh mm-hmm has been the biggest element in, in reducing transportation costs.

And, you know, containers first appeared in the sixties, right? Uh, and it revolutionized the industry. Changes in communication. I mean, I'm really old when I was growing up, if you wanted to call Europe. If you wanted to call London, you booked it in advance and it was usually something like $5 a minute.

Mm-hmm. Uh, now you can do it back when there was Skype. You could do it virtually for free and you know, you can move money with a few clicks. You know, the digitization of a global economy has been transforming. None of those tools are gonna get uninvented, we're gonna continue to use them. And countries, companies are gonna continue to, uh, engage globally.

And if you [01:03:00] think about it, you know, the United States is a mature, slow growth economy. If we grow at 3%, we're having a good year. 96% of the world's consumers are outside our borders. If you're an American company and you wanna grow, there's only one way to grow and that's to export. And the smart companies understand that, and they end up growing and they hire more people and pay them better.

And the companies that don't grow and don't do that, end up flatlining basically. So I don't think the globalization is, is dead. It's taking a detour really around us. 

Mm-hmm. 

Uh, and that to me, that's the most interesting thing. If you look at what's going on, you know, the Trump message has been the United States is no longer a reliable partner.

So other countries are finding new partners. I mean, that's sort of the message. So UK finished an agreement with India. [01:04:00] The UE EU is just starting one with India. Canada is starting negotiations with a number of Southeast Asian countries. Turkey and the UAE are starting a discussion, I think as is the UK with the, the Gulf Nations, the line of countries that wanna join the comprehensive and progressive transpacific partnership is getting longer.

There's active negotiations right now with Costa Rica. UK has joined. And the interesting thing, and they're not all gonna get to the finish line, but the interesting thing about them is they're surprisingly conventional. They're tariff lowering market access, pro market, pro trade agreements. They're just all happening without us.

Mm-hmm. 

So is our role in the trading system changing? Yes, we're retreating, but I think increasingly the rest of the world is going about its business normally with us on the sidewalk. 

Anita Kellogg: Yeah. So it'll be interesting to see the long-term impact. I [01:05:00] think of that on the United States as the rest of the world kind of integrates more along the lines of free trade, 

William Reinsch: people will develop other connections.

And I mean, you could al, you see this in the short run, in the retaliatory phase. I mean, China has essentially handed their soybean market to Brazil. Um mm-hmm. Our soybean market, our soybean farmers are never gonna recover from that. 

You know 

that market is gone. There may be some marginal changes, but essentially the Chinese have discovered somebody else is a more reliable producer at a competitive cost, at a competitive quality.

Now that's not gonna happen in every sector, on every product, but you know, when it does happen, once gone, those market shares are very hard to recover. 

Anita Kellogg: Yeah, I mean, I think kind of leads into my next question and sort of, you know, we talk about retaliation, but in actuality, we're getting all these agreements where they're putting zero tariffs on US goods.

So we [01:06:00] now have the highest tariffs in a century. Yet contrary to economists predictions, there's been no substantive impact on the general economy. And also surprising companies seem to be eating the cost of tariffs rather than passing them on to consumers. So were these warnings wrong? Is America getting a good deal by, as I said, increasing tariffs in other countries while negotiating for no tariffs on US products?

William Reinsch: Well, I think there's two comments about that. First, I think you're right, that the economic impact has been less than economists expected. I think there are two reasons for that. One was Norma stockpiling in Q4 last year, and Q1 this year, people anticipated this was going to happen. Mm-hmm. Uh, and built up their inventories, which are now getting, getting used up.

So if there's going to be an impact, you'll see it in Q3 and Q4. The other reason is that a lot of the threatened tariffs, uh, have not gone into effect. Those [01:07:00] April 2nd tariffs never happened. You know, there's a 10% that's gone into effect, but the others only have gone into, well, they're going into effect this week.

Mm-hmm. 

So August 7th, so you can't assume that. You know, the reason, one reason there's no reaction to, to the tariffs has been, there haven't been any tariffs to speak of 10% is not as big as any of the other threats. So you have to look ahead to see what's happening. So far, you're right, that producers seem to have been, uh, eating the tariffs and holding off price increases.

There's growing anecdotal evidence to suggest that that's going to change, because as the higher tariffs kick in, that's going to be an unsustainable practice. I think the indicator to look at is the growing number of comp. And you know, this comes out virtually every day as companies report quarterly earnings.

Mm. And more and more [01:08:00] companies are reporting profit declines. And profit declines means that their costs have gone up and they haven't raised their prices. So if they can. Case by case. Some will think, well, we can weather the store. Maybe this will all go away. We'll just settle for lower profits for a while.

Others that are in more precarious financial positions are not gonna be able to do that, and we're gonna find them raising their prices. So we should have this conversation again in November. Mm-hmm. Uh, and see if anything has changed. 

Anita Kellogg: Yeah. Well you're welcome to come back in November too. You were talking about market share.

If the US is getting, you know, no terrorists for US products, is that an advantage for us exports? 

William Reinsch: Well, yes, if it's true. One of the very clever political things about this is that there's only one of these agreements where there's actually a text that's been made public, [01:09:00] and that's with the United Kingdom everywhere else.

Basically we have, in a couple cases like Indonesia, there's a fact sheet. But most of the time what we have is a statement by the president, and it's a very clever political strategy. He announces it. He reveals two or three things about it and no other information. And everybody, the journalist, done write stories based on what he said, and by the time they actually get more information, nobody's paying attention because they've all moved on to the next thing.

So if you look at the Indonesia agreement, for example, all these agreements have discrepancies in the case of between what Trump says and what his foreign counterpart says. In the case of Indonesia, for example, Trump said that all of our stuff is going in duty free. The Indonesian advisor to the Indonesian president said, well, not exactly that.

The stuff that's coming in duty free [01:10:00] will be items that don't compete with Indonesian products. 

Hmm, 

that's a huge difference. Look at Korea. Korea, Trump said all of our stuff is getting in free, including agriculture, including Rice. Korea says we made no concessions on rice and beef. So somewhere in there, you know, I'm not sure where the truth is.

These things have to be resolved. If you look at both the UK and the EU deals, in both of those cases, the UK and the EU each think they got a deal on steel that is better than everybody else. There's the uk the text of the UK agreement doesn't say that, but that's what the UK believes that they're going to get.

They already have a better deal with the 25% tariff instead of 50 that everybody else got. But the UK thinks that they've been promised an even better deal. After a subsequent conversation about national security, [01:11:00] the EU believes they're gonna get a tariff rate quota on steel. Who knows, you know, there's no text.

So my column this week actually is about this. There, there's sort of three gaps in these deals. One are the areas where the two leaders actually don't agree on what was agreed to. By the way, that's not particularly unusual. When leaders meet, they tend not to be detail people and they leave the fine print to other people.

And then when the others get into the fine print, they discovered that, you know, the two leaders had different ideas of what, different concepts of what they'd settled on. So gap one or the stuff where there's no agreement, gap two is where they agreed, but the fine print has to be fleshed out.

Transshipment is a good example of that. You know, we're gonna have higher treatment, higher tariffs out what goods that are transshipped through a a third country, right? Usually from China to a third country to here. So far, there's no [01:12:00] definition of a transshipment means. And that's a huge, huge concept.

At one extreme China ship, something to Vietnam, the Vietnamese slap on a made in Vietnam label and ship it to the United States. That's customs fraud been, uh, illegal for decades. It's a big enforcement issue. There's no question about that. On the other hand, China ships steel slabs to Korea. Koreans roll 'em, roll 'em into sheet strip and wire under national customs rules.

That's a substantial transformation that makes it a new product, different tariff schedule that makes it a product of Korea, not on China. So is the United States gonna go back now to Korea and say, well, the steel was melted and poured in China. We think that makes it a Chinese product that would upend decades of customs law.

But you know, the United States might say that's our definition of transshipment. [01:13:00] All of that remains to be resolved. And then the third gap is when the administration moves the goalpost and comes back in for a second bite. Countries have asked specifically the United States, will you commit not to do that?

Will you commit that the deal is a deal? And the United States answer has been, no, we won't commit to that. I was in a meeting with a representative of foreign government and one of my colleagues said, you know, the problem with these negotiations is they're endless between filling, fleshing out all those gaps, resolving all those differences, and the administration moving the goalposts and wanting more.

This is gonna go on forever. So are zero tariffs good for us? Yes. No question. If they're really zero and if we can really take advantage of them, sure. But I think there's going to be a lot of uncertainty. That's. Last longer than people think before that. The answer to that [01:14:00] is clear. 

Anita Kellogg: Yeah. And that kind of brings me to this question that you touched on a little bit, but these trade deals since April 2nd are considered framework agreements with broad categories of goods rather than the traditional negotiated deals that were highly specific and took years to do.

How does this affect their implementation? And does this mean inherently that more negotiations will be needed? 

William Reinsch: Exactly right. It means, you know, all these differences and discrepancies are gonna have to be resolved sooner or later, and they'll be resolved by litigation, by dispute settlement, or more negotiation.

I mean, it just depends on, on what happens. I mean, it'll be litigated if somebody imports something into the United States and the CBP charges a 40% tariff because it says it's friendship. And the importer says, no, that's wrong. It wasn't transshipped. It should only be 20%. If it's a Vietnamese product, well, you [01:15:00] know, they're gonna end up eventually in the court of international trade, which will deal with the facts and settle with it.

Alternatively, you know, they go back to the drawing board and define transshipment. But you know, even if you do that, somebody always comes up with some case that's not covered by, by the definition. You know, these things are elastic terms and a lot of it has to do with content percentages. I mean, the standard rule is if more than 50% of your content is, say, Vietnamese, that makes it a Vietnamese product.

Right. 

Well, there are some people, uh, in the administration that don't wanna do it that way. They wanna do it based on who owns the company, not on the percent of content. That would mean that if it's a Chinese company operating in Vietnam, their product is Chinese. Even if the content is entirely made in Vietnam.

Now that's not the rule. Mm-hmm. But if the United States tries to impose that rule, then you [01:16:00] get back into having Rene having to renegotiate. So yeah, this is gonna go on for a long time. And in some cases governments are gonna see they, they already know this, you know, they see it coming. Mm-hmm. But there's a lot that they don't see coming that will end up arising when individuals try to get stuff in the country and discover that their understanding of the rules is not the same as CBPs understanding of the rules.

And then you end up in court. 

Anita Kellogg: Right. I mean, how effective are these courts?

William Reinsch: Well, we'll see. You know, there's a big one underway right now, which is, has regulates or addresses the, the entire question of the president's authority to impose all these terrorists in the first place. 

Mm-hmm. 

The court of international trade. Rule three to nothing that he couldn't do that of course that was appealed.

The court of appeals for the federal circuit, which is the get one that gets all the [01:17:00] CIT appeals. Mm-hmm. 

Their 

hearing was last week. We'll see what they do. They skipped a step, which is just, this is on a fairly fast track. Instead of assigning it to a three judge panel, which is a normal thing to do it, the entire court here, the case, which is good because it means that it, once they issue a ruling, there's only one next step, uh, which is to go to the Supreme Court.

Right. 

Which will certainly happen no matter who loses, they'll appeal. So the Supremes get it probably this fall. You know, will they make a decision and they'll take it up, I think for sure. So will they make a decision and by the end of the year, maybe will it sit till next June? Maybe. Trump has indicated, at least on the, on the immigration side.

A willingness to ignore court orders 

right 

up until the Supreme Court. 

Mm-hmm. Uh, 

he has not said that he'll ignore Supreme Court orders when it comes to trade. I [01:18:00] think these things are gonna get there eventually. So, you know, we'll see what he does. And, you know, with, with the Supreme Court, when it comes to economics, they're unpredictable.

This is not a, a court that normally focuses on economic issues. They focus on constitutional issues, regulatory issues, powers of the president, big picture, things like that. When they get economic issues, the outcome is unpredictable. Does not always follow ideological lines. So it's very hard to say where they'll come out in the IEPA case, which is the one I've been talking about, you know, the issue is.

Whether Article one, section eight of the Constitution, which reserves the tariff setting power to Congress 

mm-hmm. 

Has any meaning or whether the president can, can override it? The court said no. So far the conservative wing of the Supreme Court, that tends to be strict constructionists. [01:19:00] You know, if they believe their own past rhetoric, they should probably agree with that and reign in the President.

But who knows? 

Anita Kellogg: Yeah. So if Trump does win and it's found that he can levy terrorists without the need to have the buy-in of Congress, would the next president be able to get rid of them just as easily 

William Reinsch: Well, 

Anita Kellogg: or do they have a stickiness? 

William Reinsch: Yeah. The, the question this week has been whether the next president will even wanna get rid of them.

Right. Uh, 

because they raise a lot of money. And they don't raise his money as much money. I think that as Trump says, they're gonna raise. But then again, it depends on which, well, how, what terrorists are finally imposed and how long they last. Because with Trump, everything is negotiable. Mm-hmm. So even if they're imposed, that doesn't mean that a month from now he can't change his mind and do something different.

If a country comes in with another offer, but you know, they will raise a pile of money and the government will be dependent on that. [01:20:00] So there's speculation that whoever the next president is, they may find them quite comfortable. My sense has been, you know, if, if Trump will work very hard to make sure that the next Republican nominee is committed to continuing his policies.

Mm-hmm. So if that person is elected, you'll probably continue his policies. The Democrats will have more of a struggle on this issue. You know, Biden did not get rid of Trump's. China terrorists, for example. My guess about a democratic president is they wouldn't make it worse. They'll probably be cautious and slow about, about changing anything.

I mean, I don't see us going back to the status quo. There's a lot of unfairness in what Trump is doing, and I can see the Democrats trying to correct that. What's gonna come out? It's already coming out, or, you know, individual stories of people. And it's usually a small business person. 

[01:21:00] Mm-hmm. You 

know, and I, my hypothetical, which I'll keep mentioning is, you know, some little old lady in southern Ohio runs a, you know, a 12 person operation making something.

Her main input comes from China and she's gonna at one point say, you know, I just, my tariff, effective tariff now is 55%. I can't stay in business. I have to lay all these people off. And I'm gonna, or I'm gonna go broke. And she'll complain to her local paper and the New York Times will pick it up and it will go viral.

And then there will be a thousand of those because there's gonna be a thousand of those cases. And then Trump has to decide, what do I say to these people? Did I just say, well, that's tough, move on. Or more likely he's gonna say, you know, we need a process to allow people to come in and ask the government to fix that, which is what he did in his first term.

And actually, I think it's a [01:22:00] process he kind of likes because it gives him more power. He can grant basically dispensation to these people one by one. 

Mm-hmm. 

Um, he hasn't done that this time, but I think he will. And if he doesn't, I think the Democrats will. Because otherwise what happens is the people that are victims, they go into their congress, their representative and senator, and complain.

The representative doesn't like to say, I can't help you because the constituent is gonna say, yes, you can. You can vote down these tariffs. You know? Mm-hmm. You have the power, but the representative would rather say, there's a process you can use where you can apply for an exemption. So I think Trump is gonna eventually come under pressure to put that in place.

And if he doesn't, I think then actually the next president of either party would, would probably do it. But otherwise, pressure is going to build up because, you know, when you [01:23:00] try to paint with broad strokes just what he's doing, inevitably you paint yourself into a corner. 

Anita Kellogg: So staying on the topic of terrorists, trump's also using terrorists for political purposes.

For example, placing 50% terrorists on Brazil, citing the prosecution of, uh, yer Bolsonaro, his ally, who's accused plotting a coup after he lost the last presidential election. Is this action unprecedented? Uh, does it differ in any way from traditional sanctions? 

William Reinsch: It's not unprecedented. It goes back a long way.

Actually, we did that. We did this, something similar to Japan in the late thirties, uh, some people believe led to Pearl Harbor. I don't think that's on the table right now, but it's not unprecedented. In fact, the most recent precedent is precedent is China. China has reinvented economic coercion. Ask the Australians, the Koreans, ask the Lithuanians or the Norwegians about that.

China has mastered the art [01:24:00] of using trade as a weapon to achieve political objectives. So Trump didn't create this. He's actually stealing it from China. It's a really worrisome development because it's essentially at infringement on the other country's sovereignty, which is hard to negotiate, you know, so in the Brazilian case, Trump's telling the Brazilian Supreme Court an entity that is independent of the United States and independent of the Brazilian president to render a, the verdict that Trump wants and not the verdict that it's has the legal duty to decide.

A sovereign country can never agree to that. 

Mm-hmm. 

So there's not really anything to negotiate, and that's why this is such a worrisome development. Uh, if he does this more often, I mean, other countries are at that point are gonna draw the line and stand up. Most of them have drawn the line in the abstract Byer asserting their [01:25:00] sovereignty.

But you know, when you're negotiating tariffs. That's not the same thing, right? That's not about sovereignty, that's about market access and economics. When you try to get them to do something that's contrary to their own laws, you know, then you, that's when you run into trouble. So I hope it's not a trend.

I hope it's one off, but I'm very nervous about that. 

Anita Kellogg: No, I'd done some work on how even when China does this, it's effective at punishing these countries, but not in actually changing their foreign policies. So it seems like really hard to use tariffs in that manner. 

William Reinsch: It generally, you're right, it generally doesn't work when the Chinese punish the Norwegians because they gave Nibo the Nobel Peace Prize.

You know, the Norwegians didn't take the prize away. Lithuania didn't change its Taiwan policy. When they punished Korea by closing down or. Bunch of Korean, uh, facilities including department stores in China [01:26:00] because of the missile defense system that the Koreans bought. The Koreans didn't abandon the system.

Anita Kellogg: Exactly. So 

William Reinsch: it, it, I mean, you're right. It doesn't really work, but that doesn't stop people from doing it anyway. They just feel they have to, uh, it's a bully tactic. I mean, it's classy. Classic bullying. There was a book review this weekend in the post of a Robert Rice new book where he basically frames all of human history, is basically the struggle to contain bullies.

And he has a point. 

Anita Kellogg: Yeah, I think that I agree with that for sure. So one thing, you know, you have these. 90 day extension from Mexico in a trade deal and extensions given to China. And it seems like that's probably in part the result of the fact that these are the US' largest trading partners yet Canada is also one of our largest trading partners, and instead of an extension, Trump has increased tariffs on it to 35%.

What explains this discrepancy? 

William Reinsch: Yeah, I don't really [01:27:00] understand that. All the other issues, he's ended up treating them the same, and on this one he hasn't. I think there's probably a couple reasons. One, a lot of what Trump does depends on how he feels about his counterpart. He seems to like President Scheinbaum so far.

I mean, she's handled him well. His relationship with the Canadian Prime Minister has been, I guess, uncomfortable. I mean, he didn't like Trudeau and was very clear about that. One would've thought that after Trudeau left the scene and there was a new one. It was kind of time to start over. The Canadians have shown themselves over decades to be very tr tough negotiators.

Mm. I mean, if 

you look at some of the outstanding issues we have with them, lumber for example, is a, a big one. We've been arguing with them about lumber for 40 years. I mean, I remember that I, my first, when I was working in, [01:28:00] in the Senate in the eighties is when the lumber issue first came up. There's not a lot of give on the Canadian side or on our side for that matter.

And we just keep going back and forth, back and forth, back and forth, measures and countermeasures. So they've proved difficult to bully, and I think Trump is not yet, you know, descended to personal attacks on Kearney. 

Mm-hmm. 

I mean, probably he will eventually, he does that to almost everybody else, but so far he is knocked on that.

But I suspect that. Ambassador Greer and, and Secretary Lutnick and secretary Descent told him they weren't making any progress. And so this was his answer. Uh, 'cause he only has one answer. You know, if he's, he's impatient, if he doesn't like the way things are going, he ups the, you know, he imposes a new requirement and then we'll see what happens.

So far it's, I'm not sure it's brought the Canadians to [01:29:00] the table. I mean, he did this before on the digital services tax, you know, and threatened big tariffs on them, and the Canadians folded on that one. So maybe he just figured they'll fold again when he went to 35%, you know, give it a week. Maybe they will.

It 

Anita Kellogg: makes sense. I Moving on to China. So China presents numerous challenges to the United States national security, including innovation and critical technologies, ownership of supply chain bottlenecks such as rare earth minerals, and its willingness to use its economy, as we've mentioned, to punish an attempt to change the foreign policy of other nations.

As a result, there is a rare bipartisan sentiment that something needs to be done to ensure the US out innovates China and to reduce the reliance on Chinese goods in our supply chains. However, the parties differ on how to go about doing so. So former President Biden focused on industrial policy to have more semiconductors built in the US and restrict the export of [01:30:00] high-tech chips while President Trump has reversed much of this policy and instead argues that terrorists will grow American manufacturing and reduce dependence on Chinese goods.

How do these policies compare and is either approach do enough to address strategic concerns? 

William Reinsch: Well, it's tempting, but I think, I guess of recent events, I'll get to too simple to say ba biden's a run faster guy and Trump is a trip. The other guy. Guy. 

Mm-hmm. 

You know, the metaphor I usually use in dealing with this question is, is the marathon metaphor.

Mm-hmm. 

And if you're in a marathon, there's only two ways to win. You run faster than the other guy, or you trip the other guy, which you can't do in marathons. But in inter in international trade competition, you can get away with it. In fairness, both presidents are applying both strategies. Mm-hmm. Um, it's the kind of a question of emphasis.

The Biden emphasis was very clearly, I think, on the industrial policy emphasis. How can [01:31:00] we. Make ourselves more competitive so that basically we can beat the Chinese at their own game. The one difference between them that shows up in industrial policy is Biden was a carrot guy and Trump's a stick guy.

Biden's approach to industrial policy was bribery. Let's provide loans, gi uh, you know, subsidies, tax breaks to companies that will build here, locate here, let's increase the research budget. Let's do more r and d here and let's promote reshoring to manufacturing here. All of that makes sense. I think if it's a rational way to get to his goal.

Trump has the same goal, reshore and manufacturing, but he tends to use sticks rather than carrots. Namely threats and tariffs saying, if you don't come back here, you'll pay more. Mm-hmm. I, I think his view is that's cheaper. You know, I don't have to spend any money. In fact, I make money if they don't do what I say.

It's too soon to tell whether that's [01:32:00] working or not. Mm-hmm. Um, because, you know, making a decision to reshore and actually doing it takes years in the most, for most people. And in the case of something like Critical Minerals, it takes longer than that. In the United States, in average time between discovery of an or policy pro discovery of an ore deposit and commercial production is 16 and a half years.

Even if you have permitting reform, you're gonna reduce it. What? Even if you reduce it by 75%, you're still talking about four years. None of this stuff happens quickly. And it happens based on economic realities like the price of the items in question. And environmental, in case of minerals, environmental issues, and NIMBY issues.

You know, try to find a neighborhood that wants a lithium plant next door. 

Right? 

It's gonna be very difficult. So. Both are in, in that respect. I think [01:33:00] they both have the same goal running, faster goal. They're using different tools to get there. One carrots, one sticks. We'll, we'll see what happens. Trump is unraveling a bunch of biden's carrots, so we may never know what the outcome would've been.

Mm-hmm. We'll find out what the outcome of the stick strategy is. So in the next few years as it plays out, I think one area where the analogy doesn't hold is on export controls and technology transfer. Mm-hmm. Because recent signs indicate that Trump is on the verge of pursuing a different policy.

Mm-hmm. Which 

is annoying the China Hawks in Congress and in his own administration. So we'll see how far he gets. But I used to have this job in, in the Clinton administration, you know, we really developed the policy of basically a flexible control standard based on. The US running faster. So our aim [01:34:00] was to keep the adversary, in this case, China, it's not the only adversary, but in this case mm-hmm.

We'll talk about China to keep them a generation or two behind us technologically. Mm-hmm. And the theory was, as long as they were behind, we could sell 'em old stuff and we would make a lot of money selling them old stuff. And in the beginning, that worked for them because they didn't have any stuff at the high end.

Mm-hmm. You know, we could sell 'em a couple generations of older stuff, run faster, make a lot of money, which our companies could then invest in the next technology, next generation of technology. I would argue about 10 years ago that policy began to run out of gas because China decided to go it alone, you know, and to develop their own technology that was outside of us export controls.

The Biden administration's response to that. Was to change US policy and basically [01:35:00] set a flat line of performance parameters said if your performance is better than the line above the line, then, although that really means in terms of things like line width, chips below the line. But if it's, if your performance is better, it's controlled period and the line's not gonna move unless of course we change it.

So what that meant in practice was that the universe of stuff subject to controls was going to get bigger and bigger and bigger as US technology advanced. But the line stayed here. So more and more stuff got subject to control. We've been working, we have a four-part series on the implications of that policy.

Okay. Um, and we concluded that it didn't yet affect US company revenue, but it will as the pot grows. It didn't change Chinese policy, but it probably accelerated. 

Their 

efforts to design their own products. And we've done [01:36:00] four papers on the design out issue, the extent to which, or we're doing four, the extent to which the Chinese are successfully designing us out of their products.

Right. Um, and we've two are published. One is about to be, and the fourth one is, I just got the draft last week. I think it looks like Trump is changing this now. If you listen to David Sachs, his AI czar, and if you listen to Secretary Lutnick, they're saying the best strategy, at least for AI and ai, the AI tech stack, is to flood the zone.

It's in our security interest to have everybody using our technology. 

Mm-hmm. Make it 

a global standard and basically isolate the Chinese. The implication of that is we free up export controls and sell that stuff to everybody except China. That appears to be what we're doing, which is very different from the di uh, the Biden approach, [01:37:00] and which has aroused a lot of anxiety on the hill.

There's letters to the administration, I think, from both parties asking, what are you doing? You know, and to ask them to explain themselves. And there will probably be hearings when congress returns. So I don't know where this is going to go. It has perils because if you do it, you end up in all probability promoted leakage and selling high-end technology to countries that are going to resell it to China.

And that maybe in, in the end, maybe self-defeating. 

Mm. 

The administration's gamble, I think, is that they can, you know, make us AI tech stacks a global standard and everybody's gonna buy it. Think of the analogy as Microsoft's windows. Windows may or may not actually be the best thing, right? But they did a brilliant job of getting everybody to use it included in China.

So if you could do that, then you [01:38:00] successfully embedded the American approach in everybody else's technology. And the Trump people seemed to think that's the better course of action. That's very different from Biden. And it's kind of, it's not a trip the other guy approach as much as it is a run faster and get everybody else to run faster with you approach.

Anita Kellogg: Mm-hmm. 

William Reinsch: Sorry for the long answer, but it, it's complicated. 

Anita Kellogg: Yeah. And those are all interesting points. And yeah, all of this is very complicated. So even if it wanted to us cannot make all the goods it buys from China. Therefore, decoupling from China requires French oil, of which supply chain dependencies are shifted to our allies, making them less vulnerable to potential conflicts with China and other non-aligned states, yet trade tensions with allies have been increasing.

For example, Trump recently placed 25% tariffs on India and the aforementioned 35% on Canada. Are these [01:39:00] policies at odds with each other, or will political necessity overcome these tensions? 

William Reinsch: Yeah, that's a really good question. Both Biden and Trump have given lip service to friend shoring. 

Mm-hmm. 

We've done some papers on it in the pharmaceutical industry sector and recommended a trusted trade partner approach with.

And we laid out what criteria for what would make a trusted trade partner. So far, certainly in Biden, my conclusion was they didn't, it was lip service. They didn't really mean it, but they talked about it so far in Trump, I think it's the same thing. They don't talk about it nearly as much, and I don't think Trump wants reshoring.

They both want reshoring. They wanted to bring, they wanna bring it all back here. That's not really feasible, but that's what they want. Friend shoring is probably the most rational way to go because I wrote in one of my columns, the challenge is figuring out who's a friend, right? Uh, which turns out to be harder than you think, you know?[01:40:00] 

Is India a friend? Is Saudi Arabia a friend? Is Turkey a friend? They're a NATO ally. You know, these are questions that we have to ask ourselves apparently on ai. Anyway, the president decided that the United Arab Emirates is a friend. Mm-hmm. 

Because 

he's made deals to build data centers there and to sell them.

AI Advanced Technologies. That's what I was referring to earlier. I don't know if they're friends or not. I guess it's the right strategy, I think. I'm not sure that it's being properly employed with Trump, and I'm not sure that they have their, their heart is in it any way. David Sachs says, this is what we ought to do.

We'll see how far they go with that, which countries they end up, uh, partnering with. 

Anita Kellogg: Yeah, those are some very good points and something we, I've thought a lot about and we talk about it in my classes. So to kind of, uh, wrap up the discussion, what do you think are gonna be the lasting effects of Trump's trade [01:41:00] policies, at least as they've been expressed so far?

William Reinsch: If he continues with them, you know, and they become embedded in our system, uh, I think in the, in the, in the very long term, meaning 10, 20 years, you're just going to see the United States becoming isolated. In the global economic community, countries are gonna make connections with other people, with other countries, and they're gonna become routinized.

And there there's going to be a new equilibrium. I mean, there's always, after there's a period of disruption, then there's a new equilibrium that develops, people gets used to it, and it'll be one where we're less important than we were before. I mean, the Trump view is the opposite. It's that access to the American market is so important because we're so big that other countries will pay for it in the short run.

A lot of them are. Mm-hmm. But even the ones that are at the same time, they're searching for alternatives. Go back to what I said [01:42:00] about these other negotiations that are going on, and I didn't mention all of them. We published a paper that has a longer list of people care to look it up. So I think, you know, in the short run, what he's doing may work in the long run.

I think it leaves us. Off by ourselves and eventually, relatively speaking, we've always been a little bit more by ourselves. You know, trade has never been as big a part of our GDP as it has been for other countries. You know, we're still, mm-hmm. Despite decades of globalization, total trade is still, I don't know, 25, 26, 20 7% of our GDP in Europe.

It's in the forties. 

Mm-hmm. 

Uh, we've always been less dependent on trade than other countries. And now that percentage will probably go down. The economists will say that's to our detriment, we'll have less consumer choice, and the stuff that [01:43:00] is imported will be more expensive, which is why we'll have less choice.

I think what it means in the long run is you're going to see centers of innovation going elsewhere. 

Other 

countries are gonna innovate. People are busy these days. Talking about the AI race between mm-hmm. The US and China, and they have charts about, because you could break AI down into lots of different pieces.

They have charts showing who's ahead, US or China. And, uh, the reality is China's ahead in a number of, of those parts, they're ahead in a number of biotech areas. Uh, other people at CSIS produced a major study on that in the April. I think they're developing their own commercial aircraft. They're not just flooding the market with cheap stuff.

If you look at EVs, for example, you know, they're producing very efficient, high quality electric vehicles at prices that we can't match. Trump doesn't care about EVs. The result of that is probably will be [01:44:00] slow to adopt, slower than other countries to adopt them. But the point is not that, the point is that centers of innovation are popping up in other countries, and that's gonna continue.

And you know, we'll keep doing what we're doing and that'll be good, but in 20, 30 years it won't be the best anymore. And then we're gonna say what happened? And historians are gonna write about it all began in the late twenties. 

Anita Kellogg: Yeah. The effects on innovation in particular are quite, quite concerning. 

William Reinsch: It also produces, which you can already see trade fragmentation.

There's data that shows that while trade is not declining, this is post COVID. I mean, COVID disrupted everything, but while trade is not declining, it seems to be rearranging. And the data suggests that like-minded countries are trading more with each other. [01:45:00] So in other words, democracies are trading more with democracies and authoritarian states are trading more with authoritarian authoritarian states.

And there's a very large number of countries in the middle. Are trying to avoid being forced to choose, 

right? 

And that fragments the system. You see it most dramatically in the digital economy and control of the internet countries pursuing data localization strategies and content control strategies that are certainly antithetical to the First Amendment, you know, but we're really the only country that has a First Amendment.

Other countries have different attitudes about that. So if you break up the internet and just simply say that multinational companies can't function multi nationally, you're really going to put a crimp in, in trade. And so, in the short term, I kind of worry about things like that. They're very hard to sort out, you know, the, the EU has a, a policy on privacy and digital regulation that we don't [01:46:00] like.

China has the great firewall and an extreme policy on content control that we really don't like, but we don't have a policy. You know, we have I think seven states that have a policy, but the United States doesn't have a policy. And what I learned on the Hill is it's very hard to fight something with nothing.

Mm-hmm. You know, and you can go back to the EU and say, we don't like what you're doing. And the EU says, well what do you want us to do? And the US answer is basically, well, we don't know. So until we settle some of these issues internally, I think the global situation's gonna get more complicated rather than less complicated.

Anita Kellogg: Well those are great insights and, and I would love to talk to you more 'cause you brought up some really interesting issues, but wanna be respectful of your time. So thank you so much for coming on the show. Really been a pleasure. 

William Reinsch: Happy to do it. Always fun to talk about this stuff. And seriously, it would be good to do a reprise a few [01:47:00] months from now to see if any of the stuff I said is actually happening.

Anita Kellogg: Yeah, we'll definitely plan on doing that. 

William Reinsch: There are certain dangers in it. One of the dangers I've learned in this business, or one, one of the things I've learned in this business is that you can often get away with your predictions because by the time they turn out to be right or wrong, everybody's forgotten them because they moved on to other things.

And if you're right, you could come back and remind everybody that you were right. And if you're wrong, you just go on to the next thing. So I say with some trepid trepidation, maybe we should do this again. Accountability is always dangerous. The, the joke amongst the economists is, you know, provide a number or a date, but never both.

It 

makes sense. 

You know it. We'll see. But it, you know, in fairness, a lot of things that we're talking about may play out differently over the next three or four months, and it'll be fun to come back and see who was right about that. Maybe trouble turned out to be right. My gut instinct is that. The [01:48:00] truth of these things is almost always somewhere in the middle.

It won't be the next golden age like he says, but it won't be the next great depression either. Like some economists say, it'll be somewhere in the middle. 

Anita Kellogg: Yeah, I agree with you and yeah, I'd love to have you back on, so we'll try to schedule something 

William Reinsch: because Okay. 

Be great 

fun talking to you. 

Anita Kellogg: Yeah, same.

Same. Thank you so much. I think this brings us to the end of this episode of Kellogg's Global Politics. You can visit our website at www kellogg's global politics.com and follow us on X at Global Kellogg, or me ar Kellogg. 

Ryan Kellogg: You can also reach us by email, so anita kellogg's global politics.com, and myself, Ryan at kellogg's global politics.com.

As always, please see the show notes for the articles we discussed in this episode. Thanks everyone. Thanks, [01:49:00] bye.