How tariffs spoiled the Trump-Modi bromance

Summary

Marketplace Morning Report Summary

Episode Title: How Tariffs Spoiled the Trump-Modi Bromance
Host: David Brancaccio
Release Date: August 11, 2025

In this episode of Marketplace Morning Report, David Brancaccio delves into the intricate dynamics between major U.S. chip manufacturers, the U.S. government, and China, while also examining recent changes in the Consumer Price Index (CPI) data collection by the Bureau of Labor Statistics (BLS). The episode provides a comprehensive analysis of the economic and geopolitical factors influencing these developments.

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1. U.S. Chip Makers’ Revenue Sharing with the Government

Key Points:

• Nvidia and AMD Agreement: Two leading American microchip manufacturers, Nvidia and AMD, have entered into an agreement to remit 15% of their revenues from sales in China to the U.S. Treasury.
• Purpose of the Deal: This arrangement was reportedly made to secure export licenses necessary for selling their specialized chips in the Chinese market.
• Government Relations: The deal comes amidst prior threats from the Trump administration to ban chip exports to China, highlighting the contentious relationship between the U.S. government and tech companies over national security concerns.

Notable Quotes:

• Nancy Marshall Genser, Marketplace (01:18): “Chip makers Nvidia and AMD will be sending 15% of the revenues from selling computer chips in China to the US Treasury.”
• Nvidia’s Statement (01:18): “It follows rules the US Government sets for its participation in worldwide markets.”

Insights: The agreement signifies a strategic compromise where U.S. chip makers comply with government regulations to maintain their access to the lucrative Chinese market. However, former Biden administration official Peter Harrell criticized the deal, stating, “the 15% deal would also violate the Constitution which forbids export taxes” (01:18).

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2. China’s Response to Nvidia’s N20 Chip

Key Points:

• Allegations Against Nvidia: A state-affiliated Chinese media outlet claimed that Nvidia’s N20 chip contains a backdoor, allowing the U.S. to access the chip remotely. Additionally, the outlet criticized the chip for being environmentally unfriendly and technologically inferior.
• Nvidia’s Defense: Nvidia has firmly denied the presence of any backdoor, asserting the security and integrity of their products.

Notable Quotes:

• Nvidia’s Response (02:20): “There is no backdoor.”
• Chinese Media Claims (02:20): “The Nvidia model is bad for the environment and not all that technologically advanced.”

Insights: These claims reflect the ongoing mistrust and technological rivalry between the U.S. and China. The allegations not only question the security of American technology but also hint at underlying tensions regarding environmental and economic competitiveness.

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3. Federal Reserve’s Interest Rate Outlook

Key Points:

• Interest Rate Cuts Expected: Federal Reserve Governor Michelle Bowman announced expectations of three interest rate cuts within the remainder of the year.
• Implications for Markets: With only three more interest rate meetings scheduled for the year, these cuts indicate an attempt to stimulate economic growth amidst concerns of slowing markets and potential downturns.

Notable Quotes:

• Michelle Bowman (02:20): “I expect three interest rate cuts during the rest of this year.”

Insights: The anticipated rate cuts suggest the Federal Reserve’s proactive stance in addressing economic slowdown and supporting market stability. These measures could have significant effects on borrowing costs, consumer spending, and overall economic activity.

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4. Bureau of Labor Statistics Cuts in CPI Data Collection

Key Points:

• Reduction in Data Collection: The BLS has decided to cease data collection in Provo, Utah; Lincoln, Nebraska; and Buffalo, New York, citing resource constraints.
• Impact on CPI Accuracy: Eliminating data from these regions, particularly Buffalo—the 49th largest metro area—raises concerns about the accuracy and representativeness of the CPI, which directly affects cost-of-living adjustments for Social Security and other programs.

Discussion with Expert:

• Russell Weaver, Cornell University (05:21 - 08:35):
  • On Data Cuts: “Research showed that actual numbers did not differ very markedly from the numbers they were imputing.”
  • On CPI Impact: “If we're not capturing that inflation accurately... it will affect people's bottom line and ability to survive.”
  • On Federal Data Quality: “Federal data underlie effectively all policymaking... weakening the federal statistical system... will create even more tension, divisiveness, and polarization in society.”

Notable Quotes:

• Russell Weaver (05:51): “Inflation is a huge issue right now... we're starting to get a lot more skepticism about the quality of federal data.”
• David Brancaccio (07:48): “I worry that [Buffalo residents] are going to feel... marginalized by this.”

Insights: The reduction in CPI data collection threatens to undermine the reliability of inflation metrics, which are crucial for economic policy and social welfare programs. This move could lead to misestimations of cost-of-living increases, adversely affecting millions dependent on accurate CPI data for their financial well-being. Furthermore, the erosion of trust in federal data sources may exacerbate societal divisions and hinder effective policymaking.

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Conclusion

This episode of Marketplace Morning Report underscores the complexities of international trade agreements, the delicate balance between national security and economic interests, and the critical importance of accurate economic data. The discussions highlight how government policies and corporate decisions intertwine, impacting both global markets and individual livelihoods. By examining these multifaceted issues, the report provides listeners with a nuanced understanding of the current economic landscape and its broader implications.

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Speaker Attribution:

• Nancy Marshall Genser: Marketplace correspondent reporting on chip makers' agreements.
• Russell Weaver: Research Director at Cornell University School of Industrial and Labor Relations.

Timestamps Referenced:

• [00:59] - Introduction to chip makers' revenue sharing
• [01:18] - Details of the Nvidia and AMD agreement
• [02:20] - China’s response and Federal Reserve comments
• [04:30] - Introduction to CPI data collection cuts
• [05:07] - Interview with Russell Weaver
• [05:21] - Reasons behind BLS data cuts
• [05:51] - Impact on CPI and federal data quality
• [07:48] - Concerns about regional data representation
• [08:35] - Conclusion of the interview

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This summary is based on the transcript provided and is intended to offer a comprehensive overview of the episode's key discussions and insights.

Transcript

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[David Brancaccio]

Some big chip makers will pay the US Government a major cut of their sales to China I'm David Brancaccio in Los Angeles. Two American microchip makers have agreed to give the US Government a cut of their sales in China. Marketplace's Nancy Marshall Genser has the details on this unusual agreement.

[Nancy Marshall Genser]

Chip makers Nvidia and AMD will be sending 15% of the revenues from selling computer chips in China to the US Treasury. This was first reported by the Financial Times, which goes on to say the two companies made the deal in order to obtain export licenses to sell in China and the licenses were issued shortly after the agreement. The licenses will be for chips Nvidia and AMD designed specifically for China. In a statement, Nvidia just says it follows rules the US Government sets for its participation in worldwide markets. AMD didn't respond to her request for comment. The Trump administration initially said it would ban Nvidia chip exports to China in reverse course, but there are concerns the Chinese military will get a hold of these chips. In a post on X, former Biden administration official Peter Harrell said the 15% deal would also violate the Constitution which forbids export taxes. I'm Nancy Marshall Genser for Marketplace with all of this.

[David Brancaccio]

A social media account affiliated with China's state run government influenced media claims Nvidia's N20 chip is unsafe for China, asserting it gives its US maker backdoor access and could be shut down remotely. Nvidia says there is no backdoor. The China posting casts other shade, saying the Nvidia model is bad for the environment and not all that technologically advanced in an acknowledgment the economy may be weaker than we thought. Federal Reserve Governor Michelle Bowman said over the weekend that she expects three interest rate cuts during the rest of this year. There are only 3 more interest rate meetings at the Fed left this year.

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[David Brancaccio]

The government's monthly report on inflation, the Consumer Price Index, which is linked to all sorts of cost of living related matters, including the yearly adjustment to Social Security payments. This spring the Bureau of Labor Statistics announced it would stop gathering data in three parts of the country Provo, Utah Lincoln, Nebraska and Buffalo, New York. That last one the 49th largest metro area in the country. The BLS says the cuts are about available resources. Will anyone miss the data? Russell Weaver is Research Director at Cornell University School of Industrial and Labor Relations and a quantitative geographer. Welcome.

[Russell Weaver]

Thank you for having me.

[David Brancaccio]

What's your sense of why the Bureau of Labor Statistics is going to now bypass places like Buffalo Lincoln, Nebraska Provo, Utah? Do you have any sense of why they're picking on those places?

[Russell Weaver]

Well, interestingly, there was no justification. There was a supplementary release a couple of weeks after the initial notice saying that researchers at the Bureau had engaged in statistical simulations. The claim was basically made that research had been done that showed in Buffalo, Lincoln and Provo, Utah that actual numbers through data collection did not differ very markedly from the numbers that they were imputing for that same time period using their statistical techniques.

[David Brancaccio]

And so we fully understand this affects Consumer Price Index or more than the cpi.

[Russell Weaver]

The CPI mainly is where the cuts have been made, but it is going to affect the housing survey as well as the commodity and Services pricing survey. And so that is a little bit of a problem because inflation is a huge issue right now, as everybody is well aware. And so not collecting in Buffalo is probably going to present some problems because that's one of the largest population centers in this region at which the numbers eventually get summarized. And so we're going to be missing a good component there.

[David Brancaccio]

Now, I use this data in our work in financial journalism all the time, and you do too. But is it so terrible if we cut some corners or scrimp a little bit on our statistical modeling?

[Russell Weaver]

If we're not capturing that inflation accurately? That has a lot of meaning for folks who are receiving, say, Social Security payments through the government, which is an another program that's under attack. Social Security payments are adjusted for a cost of living index based on cpi. And so if we're not capturing really the dynamism of CPI and how prices are changing because we're not collecting in regions that could potentially reveal something useful to the eventual estimates that's going to affect people's bottom line and ability to survive who are dependent on wage increases or Social Security benefit increases that are generally tied to cost of living changes. But maybe the longer term and bigger picture issue here is that through a lot of these changes that we're seeing, we're starting to get a lot more skepticism about the quality of federal data. And federal data underlie effectively all policymaking and decision making at all levels of governments in the U.S. so if we're going to weaken the federal statistical system, that's going to create maybe even more tension, divisiveness and polarization in society because we'll be arguing about whether or not we can trust the numbers.

[David Brancaccio]

I mean, maybe at the personal level, too. I have a lot of friends and relatives by marriage in the Buffalo area. These are folks who want to be seen, statistically speaking, they want a consumer price index in their image. I worry that they're going to feel, I don't know, marginalized by this.

[Russell Weaver]

Not only do we want representation in these data sets, but we acknowledge that because of the data collection protocols and processes, we need to collect this information from a ton of different locations inside of a region with the goal of capturing an information that looks common or typical for that region. And so by not having that representation in the cpi, you know, we in Buffalo can sit and watch all the headlines that inflation might be easing or prices might be coming back down, but that might not be the reality for a lot of folks who are living.

[David Brancaccio]

Here speaking Indeed, from Buffalo, N.Y. russell Weaver, research director at Cornell University School of Industrial and Labor Relations. Professor, thank you.

[Russell Weaver]

Thank you so much.

[David Brancaccio]

And in Los Angeles, I'm David Brancaccio. You're listening to the Marketplace Morning report from apm, American Public Media.

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