Tim Miller: Why is Trump Making China Stronger?

Summary

Bulwark Takes Podcast Summary

Episode: Tim Miller: Why is Trump Making China Stronger?
Host/Author: The Bulwark
Release Date: May 14, 2025

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1. Introduction and Podcast Context

The episode opens with Tim Miller briefly mentioning his recent guest co-hosting experience on the "Raging Moderates" podcast alongside Scott Galloway, affectionately referring to Galloway as his "father figure." Tim expresses admiration for the "Raging Moderates" brand and encourages listeners to check out the full episode on YouTube for a deeper dive into their wide-ranging discussion.

2. Escalation of the US-China Trade War

Scott Galloway: [01:00]

Scott delves into the recent developments in the US-China trade relationship, highlighting Federal Reserve Chair Jerome Powell's warnings about the potential for Trump's escalating trade war to push the US towards stagflation—a troubling economic condition characterized by "a toxic mix of rising prices and rising unemployment" ([01:27]).

Tim Miller: [01:14]

Tim connects this discussion to historical contexts, referencing how "as a Reagan fan in high school, Republicans talked about how he ran against stagflation," indicating his familiarity with the term from his studies and political interests.

3. Trump's New Trade Framework with the UK

Scott Galloway: [01:50]

Scott outlines President Trump's recent announcement of a new trade framework with the United Kingdom, which "lowers tariffs, but only on luxury cars, including Rolls Royce and Bentley," as well as specific other items like "plane engines" ([01:50]). This selective reduction aims to ease certain trade tensions while maintaining protective measures on other goods.

Tim Miller: [01:54]

Tim adds a light-hearted comment on the inclusion of plane engines, noting, "Rolls Royce has given us some plane engines too," acknowledging the intertwining of luxury automotive and aerospace industries.

4. Temporary Truce and Long-Term Implications

Scott Galloway: [02:30]

Scott discusses the unexpected 90-day truce between the US and China, which involves a significant reduction in tariffs:

• US tariffs on Chinese goods decrease from 145% to 30%.
• China's tariffs on American products drop from 125% to 10%.

He emphasizes that while this move "helped calm global markets," uncertainty remains about the stability of this agreement beyond the initial 90 days.

Tim Miller: [02:30]

Tim critically assesses the truce, arguing that Trump "blinked" due to "very serious concerns about the economy." He points out that the new "30% tariff on China is 20 percentage points higher than under Biden," effectively "adding a 20% tax on consumers who consume Chinese goods," without substantial reciprocation from China ([02:30]). Tim expresses skepticism about the benefits of the tariff reduction, noting that past agreements included more concrete economic exchanges, such as China buying US soybeans—a provision missing in the current truce.

5. Economic Outlook and Market Reactions

Tim Miller: [04:58]

Tim continues by expressing his pessimism about the economic future despite the temporary easing of tariffs. He predicts that "GDP growth will be down to zero," describing the current situation as "the worst case imaginable scenario" that markets are prematurely celebrating because it's seen as an improvement over maintaining the exorbitant 145% tariffs ([04:58]). He warns that the lack of progress in Congress regarding the tax bill and the overall economic slowdown could have long-lasting negative effects.

Scott Galloway: [04:58]

Scott agrees, characterizing the situation as Trump "pulling the knife out of the back sort of halfway"—a move that, while temporarily alleviating some pressure, inflicts "injury [that] is going to take [...] decades to heal." He elaborates on the broader economic implications, particularly the impact on the US's status as the world's "reserve currency," which benefits American consumers through "lower interest rates" and "cost savings" totaling hundreds of billions of dollars. The deteriorating trust in the US as a stable trading partner is diminishing the attractiveness of American markets, leading to a "re-rating down of our price earnings multiple."

6. Decline in US Global Influence

Scott Galloway: [04:58]

Scott further explains that the persistent uncertainty caused by erratic trade policies has transformed the US into an "economy of toxic uncertainty," making it difficult for global businesses to plan and invest. This shift undermines the US's attractiveness as a trading partner, as countries prefer the reliability and consistency they associate with American rule of law and entrepreneurial culture. He cites a poll indicating that "more people around the world think that China is a greater force for good in the world than the US," signaling a significant decline in global perception and trust.

Tim Miller: [10:50]

Tim echoes Scott's concerns from a geopolitical perspective. He laments the erosion of traditional Republican strength against communism and the failure to maintain a "Reaganite policy" focused on great power struggles. Tim points out that the US's lack of enforcement on issues like the TikTok ban demonstrates a broader weakness, allowing China to "infiltrate American culture" and gain further influence. He asserts that the US has "weakened ourselves pretty noticeably" across multiple metrics, leaving it vulnerable in the global arena.

7. Geopolitical Consequences and Soft Power Decline

Tim Miller: [10:50]

Continuing his analysis, Tim highlights how the US has "gutted USAID" and eliminated much of its "soft power," creating opportunities for China to fill the void. He notes that the failure to enforce policies like the TikTok ban not only cedes control over American cultural platforms but also signals weakness to international partners and adversaries alike. Tim expresses concern that China might perceive the US as incapable of resisting its strategic moves, particularly regarding Taiwan, given the US's inconsistent actions in other geopolitical hotspots like Ukraine.

8. Long-Term Economic and Strategic Implications

Scott Galloway: [10:50]

Scott concludes by emphasizing the long-term damage inflicted by the current trade policies. The temporary rollback of tariffs may provide short-term relief, but the underlying issues—such as diminished trust, reduced market confidence, and weakened global standing—pose significant challenges for the US economy and its strategic positioning. He warns that "resupplying or rerouting of the supply chain" to counteract China's dominance will likely take "years, if not decades to re-heal."

9. Final Thoughts and Call to Action

As the episode progresses toward its conclusion, both hosts underscore the urgency of addressing the detrimental effects of the trade war and restoring America's economic and geopolitical strength. Tim encourages listeners to consider the broader implications of these policies on the US's future standing in the world and the everyday economic realities faced by American consumers and businesses.

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Notable Quotes

• Scott Galloway [01:27]:
  "Stagflation is sort of a step or a bridge to a depression."

• Tim Miller [02:30]:
  "We still put a 20% essentially sales tax increase on Americans, like for nothing."

• Scott Galloway [04:58]:
  "We have now become the land of toxic uncertainty."

• Tim Miller [10:50]:
  "Across every metric, we have made China stronger over the past five months."

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Conclusion

In this episode of Bulwark Takes, Tim Miller and Scott Galloway provide a comprehensive analysis of President Trump's trade policies and their unintended consequences on China's rise and the US economy. They delve into the complexities of the US-China trade war, highlighting how tariff escalations have not only strained economic relations but also eroded America's global influence and economic stability. The discussion underscores the importance of strategic, consistent policies to maintain economic health and geopolitical standing, cautioning against short-term maneuvers that may lead to long-term detriments.

Listeners gain valuable insights into the intricate dynamics of international trade, the fragile balance of economic policies, and the profound impact these have on both national and global scales. The episode serves as a critical examination of recent political decisions and their far-reaching implications, encouraging informed discourse on the path forward for US economic and geopolitical strategy.

Transcript

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[Tim Miller]

Hey y' all, it's Tim Miller. Yesterday I had the pleasure of guest co hosting the Raging Moderates podcast with my father figure Scott Galloway, Prof. G and I am so jealous of their brand. Raging Moderates. It sounds good. It was a great chat, wide ranging. Wanted to show you a couple clips from it here then you can head on over to their YouTube if you want to see the full video video. Hope you enjoy. I know you will. I love propg. I love that guy. It's a great show. Check it out.

[Scott Galloway]

Let's move on to the tariffs here. All right, so back in Washington, Fed Reserve Chair Jerome Powell Chairman Powell warned that Trump's escalating trade war could drive the US towards stagflation. It's probably a word you don't know because you're too young. You haven't had it since the 70s.

[Tim Miller]

I read about it in the history. You've read about it? Well, I mean as a Reagan fan in high school Republicans, people talked about how he ran against stagflation. Familiar with it in that context.

[Scott Galloway]

So it's this toxic mix of rising prices and rising unemployment where basically interest rates go up and the economy slows down and it's sort of stagflation is sort of a step or a bridge to a depression. But on Thursday, Trump announced a new trade framework with the UK that lowers tariffs, but only on luxury cars, including Rolls Royce and Bentley. Well, thank God toys, including plane engines.

[Tim Miller]

I think got thrown in there too. I think Rolls Royce has given us some plane engines too.

[Scott Galloway]

Toys including Barbie and Hot Wheels will face percent tariff Then over the weekend, there was a surprise detour. The US and China agreed to a 90 day truce, temporarily rolling back some of the steep tariffs that had been hammering both economies. By May 14, the US will slash its tariff on Chinese goods from 145 to 30%, while China will lower its own tariffs on American products from 125% to just 10%. The move helped calm global markets, but it's anyone guess if the pause will hold. They now have 90 days to make a deal. What do you think will come out of this? What's your impression of what's happened as of this morning, Tim?

[Tim Miller]

I mean, I think for starters, obviously Trump blinked and had very serious concerns about the economy. I mean, if you just look at the broad contours of this. So 30% tariff now in China is 20 percentage points higher than it was under Biden. Right. So it was at 10 and now it's up to 30. And so we've added a 20% tax on consumers who consume Chinese goods. In exchange for nothing. Like in exchange for nothing. I mean, the Chinese didn't even, there were some, I guess, promises around fentanyl or something, but they didn't in the past, in the first Trump term when they did the tariffs with China, there was also a deal where they were buying our soybeans. And there are other economic. And maybe that'll come over the next 90 days, I don't know. But as of right now, we still have increased. We still put a 20% essentially sales tax increase on Americans, like for, for nothing. Just, just so that Donnie could like, feel tough for a little bit. So how does it go from here? I don't, I mean, I think that I'd be interested in your take on like, I noticed the markets are up quite a bit today. I, I just generally think it's maybe my pessimistic nature that like the markets and business leaders have been like a little bit too sanguine about like kind of where we're heading. I think that, that this is going to be relatively ugly. This move away from a total trade embargo on China has walked us away from the brink of a worst case scenario, economically, at least temporarily. But even still. And if you would have went to any of these people in October and said, hey, I'm from May 2025 and here's what the economic outlook's going to look like, then we're going to have a 10% across the board tariff on everybody. 30% on China increased. The tax bill that you guys were counting on is going to be floun during in Congress and we'll see what happens with that. But we haven't really made any meaningful progress of it yet on May and GDP growth will be down to zero. I feel like everybody would think that was. I feel like business people outside of politics would say that that's almost a worst case imaginable scenario and that's where we are now. But people are kind of spinning in as a positive because it ends up being better than what the worst case Scenario was that we were staring down the pike of had they kept the 145% in. So I don't know. What do you make of.

[Scott Galloway]

So he's pulled the knife out of the back sort of halfway. That's the good news. The bad news is the injury is going to take, I think, decades to heal. Because even worse than the tariffs themselves, which obviously increase consumer prices and slow the economy, I think the most lasting damage here is that we have now become the land or the economy of toxic uncertainty. And that is people don't even know how to plan their businesses. And the U.S. s and P trades at a price earnings multiple of around 26, meaning for every dollar of profits that our great American companies generate, the world rewards US with $26 in value, which flows right into not only the pockets of shareholders, but employees. It lowers interest rates. We can borrow money at a much lower rate. The US Dollar is kind of the reserve currency because everybody wants to buy American stocks. So there's greater demand for dollars. And the US Being the reserve currency globally, literally lowers interest rate that you pay across your student loans, your mortgages and your car loans, somewhere between half and 1%. So that's just literally hundreds of billions of dollars in cost savings that the Americans enjoy because of the fact that our markets trade at a higher multiple on earnings. Now, why do they trade at a higher multiple? A lot of reasons. We're more risk aggressive. Our technology is better. We have more of a zeitgeist or a culture of entrepreneurship. We have great universities, great intellectual property, but we also have rule of law and consistency. We're seen as good trading partners. We're seen as people we can count on. We're seen as a place where there isn't going to be a ton of corruption, where you come and say, open a bunch of restaurants and then the government shows up one day and says, sorry, we now own them. And that happens in other countries around the world. Rule of law and consistency have been thrown out the window in just 110 days. And you're starting to see a reduction in the price earnings multiple. And I believe over the next several years, we're going to see a re rating down of our price earnings multiple, which effectively increases the cost on all American businesses and consumers because. And the market has sort of said this to a certain extent. The market has said, we don't really know what this guy's going to do and we don't trust him. 145% tariff. I mean, this is what a bad negotiator is. The first thing we need to do is dispel the myth that this guy's a good business person. He would be wealthier if he'd taken his massive inheritance and invested it in index funds. His business career includes a trail of bankruptcies and unpaid subcontractors. He is an outstanding. To be fair, he's an outstanding reality talk show host. Made several hundred million dollars hosting and envisioning a reality talk show. As a business person, he's not very good. And in terms of negotiating, he's negotiating himself at this point, he put on 145% tariff, and then a few days later, without any counter from the Chinese other than this is unacceptable and we're not even going to talk. He said they're unsustainable. It's like, well, boss, you're the one that did it. So to go to 145 and then to go down to 30 and effectively what you have is the Chinese are divesting away. This will keep the factories sort of humming in China. This will basically loosen up or cancel the trade embargo for the time being. But also negotiation. You have to understand your leverage and the amount of leverage you have. And what is typical of America and Donald Trump, we're under the impression we're much more powerful than we are. People think of us as, you know, we're the only customer at the taco stand here and that without us, they go out of business. We're the third largest trading partner. The association of Southeast Asian nations and the EU are bigger trading partners with China. China has been divesting away from us. And this is kind of. I think this is good for them. They get to continue to sell not as many products, but still not the shock that this trade embargo was going to implement on them. At the same time, it will slowly but surely continue to div away from us. And that is what the whole world is doing, Tim. The whole world is rerouting their supply chain around the United States, not even because of tariffs, but because they don't know how to plan their business with us because of this toxic uncertainty. And I think that resupplying or that rerouting of the supply chain will take years, if not decades to re heal. And I do think the Americans have taken for granted the American public of just how inexpensive our goods are because of the supply chain that runs through the US of every major economy, because they trust us and think there's rule of law, and those things are no longer a given with us the scariest stat I've seen organization did a poll of global citizens, took a statistically significant sampling, and for the first time in history, more people around the world think that China is a greater force for good in the world than the US which says to me people are much more inclined to do business with China than they are with the US and as someone who has run businesses, I've run businesses my whole life. They've always been global businesses because they've been strategy and brand firms. When I walk in a meet with LVMH or Samsung, Tata Motors, we're taken seriously. And also when they do business with us, they want to do business with us. If I'd started a brand strategy firm in Pakistan or even in Thailand, they're just less inclined to do business with you because they don't know you, they don't trust you as much. They don't think you're as innovative. They probably don't think your employees are as good. They're not as confident you're going to uphold your side of a legal contract. The legal contracts aren't as easily, you know, agreed to because they're not as consistent with kind of American or Western law. All of that we have had massive benefit from. And I don't think American consumers realize how much they benefited from that. And they're going to realize it when everything just gets a little bit more difficult. Your thoughts?

[Tim Miller]

Yeah, no, I agree with most of that. I'll just defer to your expertise on the economy side of things. So I concur with it. I just like putting on my former Republican hat. But just on the China hawk side of it. I remember we used to have a Republican Party that was strong against communism and that felt like wanted to use more of a Reaganite policy and great power struggles. We've seen these guys basically fold in the face of China. I just think broadly, more geopolitically. Think about the advantages China has gained over the past five months in addition to all the stuff you just laid out, the fact that we've totally gutted USAID and we've eliminated any soft power we have throughout the world and created a huge opportunity for China to fill that void. To your point, on the economic trading partner side of things, I think that if you are one of those Asian countries like Thailand that you just mentioned, don't you feel like you can trust China a little bit more as a trading partner than you could have five months ago? For sure. Then you look at the policy side of things, talk about leverage and weakness I mean, we completely fold on the Liberation Day tariffs. Meanwhile, we also completely fold when it comes to TikTok. And the US government puts into law a TikTok ban, but Donald Trump and this administration won't enforce it because they're afraid of the backlash from the American population. So China has been so successful in infiltrating American culture through TikTok, and the power of that is so great that the US Government is scared, let's just be honest, scared to enforce its own laws when it comes to banning TikTok China State TV this morning I saw this. They put this out. The outcome of trade talks with Trump team shows China's firm countermeasures and resolute stance have been highly effective. China gets nearly all tariffs off for doing very little other than agreeing to talk. That's their spin this morning. I just think across every metric, we have made China stronger over the past five months in ways that, as you say, are going to be hard to unravel. And there isn't really any evidence that we are trying to win a great power struggle with them. And I guess I would add, just the last thing I'd say on it is if you're China, it's hard for me to get inside the head of Xi Jinping. And I don't know what their plans are with regards to Taiwan or their timing, but I just do not think they could look at America right now and think that we would put up any real resistance to their efforts to overtake Taiwan if they wanted to do it, based on how we've acted with regards to Ukraine, how we've acted with regards to this trade war. So I just think that we've weakened ourselves pretty noticeably across a variety of different metrics vis a vis China.