Trying to keep a fragile trade truce alive

Summary

Podcast Summary: "Trying to Keep a Fragile Trade Truce Alive"

Marketplace Morning Report – October 16, 2025
Host: Sabri Benishour (in for David Brancaccio)

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Episode Overview

In this compact but informative episode, Marketplace Morning Report zeroes in on the ongoing challenges in U.S.-China trade relations, the impact of a U.S. government shutdown on economic data, and global efforts to build independent AI infrastructure. The episode features insightful commentary from Marketplace correspondents, government officials, economic experts, and a global markets update from the BBC.

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Fragile U.S.-China Trade Truce

[00:59–02:42]

Key Discussion Points

• Current Diplomatic Efforts:
  • U.S. and Chinese officials are meeting during IMF and World Bank meetings in Washington, D.C., in an attempt to sustain a "fraying" six-month trade truce.
• Tariff and Trade Threats:
  • President Trump has threatened China with a 100% tariff, while China threatens tighter export controls on rare earth materials.
  • Both nations have retaliated with increased port fees.
• Expiration of Truce:
  • The current truce, which keeps tariffs lower, is slated to expire on November 10th.
• Prospects for Extension:
  • U.S. Treasury Secretary Scott Besant suggested a possible extension if China delays its rare earth export controls.
• Upcoming Negotiations:
  • These discussions are set to continue up to the Asia Pacific Economic Cooperation (APEC) forum in South Korea at the month's end, where Presidents Trump and Xi may meet.

Notable Quotes

• "President Trump threatened China with an additional 100% tariff, and Beijing said it would tighten export controls on rare earths. Both sides rolled out port fees on each other's ships."
  — Nancy Marshall Genser, Marketplace Correspondent ([01:24])

• "So is it possible that we could go to a longer roll in return for a delay? Perhaps. But all that's going to be negotiated in the coming weeks before the leaders meet in Korea."
  — Marketplace's reporter ([01:53])

• "Besant says the US doesn't want to economically decouple from Beijing, but it does have levers it can pull on US Products the Chinese need."
  — Nancy Marshall Genser ([02:24])

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U.S. Economic Outlook in the Midst of a Government Shutdown

[02:42–04:42]

Key Discussion Points

• Data Gaps:
  • The U.S. government shutdown means vital economic data is missing, making private and Federal Reserve reports more important.
• Beige Book Insights:
  • The Beige Book and regional Fed manufacturing surveys show a labor market that is weak but not collapsing.
• Emerging Threat of Stagflation:
  • Chief Economist Diane Swonk highlights a "whiff of stagflation" — rising input and service sector prices, despite tepid demand.
• Opportunistic Price Increases:
  • Swonk explains the Fed’s concern about companies raising prices not solely due to tariffs, but because diminished competition allows them to do so.

Notable Quotes

• "The labor market, although weak, is not falling out of bed. It is still weak. And that is something the Fed is trying to hedge against. But at the same time we're starting to see that sort of whiff of stagflation... we're seeing some... opportunistic price increases and stickiness in service sector inflation."
  — Diane Swonk, KPMG Chief Economist ([03:22])

• "It's basically meaning that people are seeing competition diminished in response to tariffs... They're able, even if they're not feeling the tariffs, to raise prices as well. That's sort of this contagion and spillover effect and that's exact opposite of what you'd like to see."
  — Diane Swonk, on "opportunistic pricing" ([03:58])

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Global Markets: The Push for Independent AI Infrastructure

[05:59–08:00]
BBC World Service report by Hannah Mullane

Key Discussion Points

• AI Infrastructure Divide:
  • The U.S. and China own 90% of the world’s data centers, giving them outsized influence over AI development.
• Resourcefulness Elsewhere:
  • In Argentina, Professor Nicholas Vulevic’s team repurposes a converted university room and decade-old servers for AI research, revealing a stark contrast with U.S. tech giants.
• Challenges in Emerging Markets:
  • In Kenya, software engineers at the AI startup Carla must work awkward hours to access limited international computing resources because of the lack of local data centers.
• Data Sovereignty and Business Agility:
  • Companies like Carla worry about data protection and are seeking European cloud providers to avoid dependency on U.S. and Chinese infrastructure.

Notable Quotes

• "We used very old servers that were from 2012 and we repurposed them adding GPUs.... It was the only way to get something related to AI working."
  — Nicholas Vulevic, Professor, National University of Cordoba ([06:47])

• "When you're training a model, you're sending large files of data to computer system somewhere. The further it is, the slower it is... Sometimes the engineers leave it overnight to run so that when Americans have gone to sleep, they're able to run their work. Before Europe wakes up, you're able to run their work."
  — Shiko Kutao, CEO of Carla ([07:40])

• "Some companies are concerned about protecting proprietary data and are now looking to Europe for cloud providers."
  — Hannah Mullane, BBC World Service ([07:55])

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Additional Memorable Moments

• Expert Rapid-Fire:

  • Diane Swonk’s concise explanations of economic headwinds—from opportunistic pricing to the fragility of the labor market—offer listeners a clear window into current policy concerns ([03:22–04:36]).

• Vivid Reporting:

  • BBC’s Hannah Mullane brings listeners inside an Argentinian AI lab, capturing the innovation and frustration of tech talent working with global tech imbalances ([06:17–07:05]).

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Key Timestamps

• [00:59] – U.S.-China Trade Truce Update
• [01:24] – Breakdown of Tariff Moves and Truce Expiry
• [03:22] – Economic Health Check: Beige Book, Stagflation, Pricing Power
• [05:59] – BBC AI Infrastructure Segment
• [06:47] – Argentina’s DIY AI Lab
• [07:40] – Kenya’s Challenges with AI Compute Power

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Tone & Style

The episode maintains Marketplace’s signature blend of brisk pacing, keen analysis, and real-world reporting. It moves swiftly between hard news, expert insight, and on-the-ground global vignettes—capturing both the urgency of economic policy and the ingenuity facing those at the world’s tech periphery.

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For Listeners:

This episode is essential for anyone looking to understand the intersection of trade, tariffs, fragile global agreements, and the battleground over technology infrastructure—all delivered with Marketplace’s clear-eyed reporting and international reach.

Transcript

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[Sabri Benishour]

Trying to keep a fragile Trade Truce alive From Marketplace, I'm Sabri Benishour in for David Brancaccio. U.S. and Chinese officials are getting together on the sidelines of International Monetary Fund and World bank meetings in Washington to try and preserve a fraying trade truce. Yesterday, Treasury Secretary Scott Bessen offered a ray of hope. Marketplace's Nancy Marshall Genser has the latest.

[Nancy Marshall Genser]

In the latest trade spat, President Trump threatened China with an additional 100% tariff, and Beijing said it would tighten export controls on rare earths. Both sides rolled out port fees on each other's ships. There has been a shaky tariff truce for the past six months, which kept lower duties in place. It's set to expire November 10th. Yesterday, Treasury Secretary Scott Besant said it could be extended in if China holds off on the rare earth export controls.

[Narrator/Reporter]

So is it possible that we could go to a longer roll in return for a delay? Perhaps. But all that's going to be negotiated in the coming weeks before the leaders meet in Korea.

[Nancy Marshall Genser]

South Korea will be hosting the Asia Pacific Economic Cooperation forum at the end of this month, Besant said. As of Tuesday night, President Trump was expecting to meet with Chinese President Xi. On the sidelines of that, U.S. trade Representative Jamison Greer said yesterday he doesn't think China will actually impose the restrictions it's threatening on rare earth exports. Besant says the US doesn't want to economically decouple from Beijing, but it does have levers it can pull on US Products the Chinese need. I'm Nancy Marshall Genser for Marketplace.

[Sabri Benishour]

With the government shutdown ongoing, there is a lot of government data we are not getting. But there are lots of other sources of information offering up clues as to how the economy is doing. Diane Swonk is here to help us understand what this data is saying. She's chief economist at tax audit and advisory firm kpmg. Morning, Diane.

[Diane Swonk]

Good morning.

[Sabri Benishour]

So we've got the Beige Book that's kind of like the storybook of the economy anecdotes from the economy that the Federal Reserve puts out. We've also got some manufacturing surveys from the Federal Reserve banks of New York and Philadelphia. What's the picture all that is painting for us right now?

[Diane Swonk]

The labor market, although weak, is not falling out of bed. It is still weak. And that is something the Fed is trying to hedge against. But at the same time we're starting to see that sort of whiff of stagflation. We're still seeing input prices go up and we're seeing some what the Fed termed as opportunistic price increases and stickiness in service sector inflation. Those are things they'd rather not see at this stage of the game as they're dealing with and trying to tease out the effects of tariffs and hoping mean that they're not permanent.

[Sabri Benishour]

In terms of inflation, what is opportunistic pricing? What does the Fed mean by that?

[Diane Swonk]

Yeah, that's an interesting term. It's basically meaning that people are seeing competition diminished in response to tariffs and in response to that diminished competition by their competitors. They're able, even if they're not feeling the tariffs to raise prices as well. That's sort of this contagion and spillover effect and that's exact opposite of what you'd like to see when you want to look through the tariff based inflation and say it's just a one time or in this case, you know, it's come in waves. We've seen tariffs levied in waves, several step functions. But there's an end point and when you see that contagion, you worry the end point won't be there.

[Sabri Benishour]

Diane Swunk is chief economist at the audit, tax and advisory firm kpmg. Thank you so much.

[Diane Swonk]

Thank you.

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[Sabri Benishour]

China and the US dominate the field of AI 90% of the world's data centers are owned by US and Chinese companies. But a lot of other countries want a piece of the revolution, hoping to get the big tech firms to build some infrastructure within their borders. The BBC's Hannah Mullane has that one.

[Hannah Mullane]

Nicholas Vulevic is a computer science professor at the National University of Cordoba in Argentina. He is running what counts as one of his country's most advanced AI computing hubs from a converted room at the university, a stark difference from the infrastructure you might find in the us.

[Narrator/Reporter]

Let's enter, but the noise will be unbelievable.

[Hannah Mullane]

Nicholas has been repurposing a lot of old computer equipment to run the site.

[Narrator/Reporter]

We used very old servers that were from 2012 and we repurposed them adding GPUs. So we added stuff like that to get a new life to the computer. It was the only way to get something related to AI working.

[Hannah Mullane]

It's a theme replicated in many parts of the world. Lack of investment and infrastructure holding countries back from developing homegrown artificial intelligence businesses. In Kenya's capital Nairobi, software engineers for the AI startup called Carla head into the office at 3:30am they develop artificial intelligence software for businesses around the world, but they don't have local data centers to power their business, so they have to use compute power from other parts of the world.

[Shiko Kutao]

You have to find time when not everybody's hogging their resources.

[Hannah Mullane]

Shiko Kutao is the CEO of Carla.

[Shiko Kutao]

When you're training a model, you're sending large files of data to computer system somewhere. The further it is, the slower it is. Sometimes the engineers leave it overnight to run so that when Americans have gone to sleep, they're able to run their work. Before Europe wakes up, you're able to run their work.

[Hannah Mullane]

But relying on the US and China for that computing power isn't ideal for Carla and other AI startups. Some companies are concerned about protecting proprietary data and are now looking to Europe for cloud providers I'm the BBC's Hannah Mullane for Marketplace, and in New York.

[Sabri Benishour]

I'm Sabri Benishore with the Marketplace from APM American Public Media.

[Kimberly Adams]

I'm Kimberly Adams, host of Make Me Smart, a podcast from Marketplace that makes today make sense. Join me throughout the week as I dig into the biggest stories in tech culture and the economy. Whether it's a vibe check on the job market or the latest on China US Relations, Make Me Smart helps you understand how the headlines actually impact your daily life. Listen to Make Me Smart on your favorite podcast app.