Michael Froman on the New 'Polyamorous' Global Trading System

Summary

Odd Lots Podcast Summary

Episode: Michael Froman on the New 'Polyamorous' Global Trading System
Hosts: Joe Weisenthal and Tracy Alloway
Guest: Michael Froman, President of the Council on Foreign Relations & Former US Trade Representative (2013-2017)
Date: September 20, 2025

---

Episode Overview

This episode explores the dramatic transformation of the global trading system, particularly in the wake of escalating US-China trade tensions and the rise of protectionism. Joe and Tracy interview Michael Froman––a key player in pre-Trump trade policy––to discuss what has changed, what is left of the old multilateral rules-based order, and how emerging “polyamorous” (multi-aligned rather than bi- or uni-polar) global trading relationships are shaping the future. The conversation ranges from the effectiveness of past trade agreements to the prospects for global cooperation in a world where countries are striking a new balance between economic and strategic concerns.

---

Key Discussion Points & Insights

1. The Changing Face of Global Trade

• The hosts open with observations on how the global economy has changed since the most recent trade ruptures, with noticeable but not catastrophic disruptions for consumers and businesses.
  • Example: Tracy's delayed auction item from the Netherlands due to new tariffs and customs uncertainties (02:15).
• Both hosts reflect that a “return” to pre-2016 US-China relations seems unlikely, emphasizing the bipartisan and now “durable trend” towards a more protectionist and decoupled trading system (03:09).

2. Role of the US Trade Representative & the Old Era

Michael Froman describes USTRA’s unique challenges and the way past negotiations functioned:

• Negotiations involved setting agendas, driving rules-based standards, and dealing with the complexities of industries (e.g., 500 uses for a milk molecule) (04:45-05:44).
• The US led by raising global standards to level the playing field for high-wage, highly-regulated economies (06:20).
• Past practice was "rules, not just rates"—targeting labor, environment, services, not just tariffs.

“It was the way the US brought other countries along to adopt high standard rules across one sector or one subject matter or another.” — Michael Froman (06:12)

3. Erosion of Multilateralism and the WTO

• Froman: The WTO and the rules-based system were already under stress before Trump; Trump merely finalized a long decline (07:42).
• Tracy pushes on whether these rules ever worked for everyone—citing persistent complaints about cheating and blame-shifting (08:20).
• Froman points out that “most countries follow most rules most of the time,” but China’s rise changed the balance:
  • China embraced openness only so far; Xi’s policies reversed this and now, “it’s following a fundamentally different set of rules” (09:58).
• Enforcement at the WTO is slow and often ineffective—China sometimes delayed implementation until US industries evaporated (15:52).

4. Carrots, Sticks, and Trade Agreements

• Obama-era approach combined legal enforcement (filing WTO cases, especially against China) with positive incentives—TPP as an example:
  • Smaller countries raised labor/environmental standards in exchange for better access, especially to the Japanese market, not just the US (16:12-17:32).

5. Inflection Points and Structural Change

• Critical moments of realization:
  • Doha Round collapse (2009) showed misfit of old rules with China’s rise (18:13-21:34).
  • Failure of 2016 Environmental Goods Agreement negotiations over bicycles as a microcosm of broader disagreement (21:34).
  • Even pre-Trump, US saw that the global system would not work as envisioned—tried (with little success) to persuade China that its own prosperity depended on a benign international system.

6. Biden’s Continuity and Tariff Challenges

• Biden administration continued and broadened many of Trump’s trade policies, unable or unwilling to remove “easy to put on, hard to take off” tariffs, even on non-strategic products (22:55).
  • Who suffers? Low-income Americans pay more for everyday essentials due to blanket tariffs (24:22).
• “Tariffs are easy to put on and hard to take off, because once they’re on, there are constituencies that are supportive of them.”—Froman (23:12)

7. The "Polyamorous" Global Order

• With both the US and China setting their own rules, others are left to “choose a lane” or balance multiple partners (24:58).
• Globalization continues—but now through fragmented, overlapping agreements (European & African free trade deals, for example).
  • Robert Kaplan: “It’s the US that has exempted itself” (29:40).
  • But, large countries like India or Brazil are wary of China as much as the US, fearing the dumping of Chinese industrial oversupply.

“It’s not multipolarity… It’s like polyamorous life. India is the archetypal example: aligned with the US for some things, Russia for oil, Iran for oil, and they love/hate China depending on the day.” — Michael Froman (31:12)

8. Middle Powers and Alliance Complexity

• The emerging world order is about “multi-alignment,” not non-alignment.
• Success relies on “coalitions of the willing”—temporary, issue-specific alliances—requiring leadership and complex coordination (32:21, 33:33).
• China is adept at forming these flexible coalitions (BRICS, Shanghai Cooperation Organization); the US needs to match this agility.

“In retrospect, the Cold War was very simple… This is much more complicated.” — Froman (32:48)

9. Reshoring, Friend-shoring, and Inefficiency

• There’s a real danger of global redundancy: every country wants its own strategically essential industries (semiconductors, batteries, etc.)—leading to a costlier, less efficient world, but possibly one with more resilience (35:38-36:51).
• The tension: maximizing efficiency (dependency on China) vs. diversifying for security.

10. Trade, National Security, and the "Small Yard, High Fence"

• The US is moving from separating trade and national security to “economic security.”
• The danger is ever-widening controls and a shrinking scope for free trade.
• Critical issue: Can/should the US rely on allies (“friend-shoring”) for key inputs and products (pharmaceuticals, shipbuilding, rare earths, etc.), or insist on making everything at home? (37:19-41:22)

11. The Convergence Paradox—US as China?

• US policy is increasingly interventionist—embracing industrial policy and protectionism, much as China has done for years.

“Rather than them becoming more like us, we have become more like them. And…we’re now competing with them on their playing field under their set of rules.” — Froman (41:56-42:08)

12. What Can Be Learned? The Limits and Dangers

• China’s industrial policy is not universally successful—it has resulted in huge resource waste.
• Yet, the US seems to be relying mainly on tariffs rather than a multifaceted state support model.

“We know what the costs of tariffs are, and we’re taking a gamble… whether tariffs alone are going to remanufacture the United States economy.” — Froman (46:28)

• Real risks: poor US industrial policy execution; trying to do too much domestically, not outsourcing to or cooperating with allies; and risking inefficient, unsustainable self-reliance (47:29).

---

Notable Quotes & Memorable Moments

• On the new world order:

  “It’s really more akin to polyamorous life… India loves the United States… They love Russia for oil, for arms… They love Iran for oil… And they love and they hate [China] depending on the day… So I think India is archetypal of trying to play these relationships.” — Michael Froman (31:12)

• On the failure of trade enforcement:

  “By the time the fix was implemented, the relevant industry in the United States or elsewhere was gone… cold comfort.” — Michael Froman (16:15)

• On tariffs’ political durability:

  “Tariffs are easy to put on and hard to take off, because once they’re on, there are constituencies that are supportive of them.” — Michael Froman (23:12)

• On the US learning from China:

  “We always thought… by bringing China into the international system, we would become more alike. Now our view was they would become more like us… Rather than them becoming more like us, we have become more like them.” — Michael Froman (41:56)

• On the complexity of the current global order:

  “In retrospect, the Cold War was very simple. It was black and white… This is much more complicated.” — Michael Froman (32:48)

• Humorous intro to “polyamorous world order”:

  “India is the perfect episode title.” — Tracy Alloway (31:21)

• On Tradle and global economic complexity:

  “I don’t always get it right, but it’s a good reminder of just how complex certain economies are.” — Michael Froman (48:37)

---

Timestamps for Core Segments

• Overview of post-Trade War changes: 01:49–03:09
• What does the US Trade Rep do? 04:40–05:44
• Rules-based system evolution & WTO’s decline: 07:42–09:58
• China’s impact and WTO enforcement limits: 14:15–16:15
• Obama administration’s trade strategies: 15:28–17:32
• Critical moments (Doha collapse, environmental goods): 18:13–22:32
• Shift from Trump to Biden and entrenched tariffs: 22:55–24:42
• State of the global system – mercantilism, fragmentation: 24:58–26:32
• Globalization shifts to polyamory: 29:40–32:16
• Small alliances, multi-alignment, and US/China coalitions: 33:07–34:34
• Reshoring, cost/efficiency trade-offs: 35:38–36:51
• Economic security and “small yard, high fence”: 37:19–39:47
• Friend-shoring vs. reshoring; administration challenges: 39:48–41:22
• US adopting Chinese-style intervention: 41:30–42:08
• Risks and limits of tariffs & US industrial policy: 45:29–46:28
• What could break the system (“left tail risk”): 47:07–48:27
• Wrap-up and lighter moments (Tradle, dairy farmer): 48:33–49:01

---

Conclusion: The Polyamorous Trade System

Michael Froman, reflecting on his experience and current analysis, argues that the old, neat world of US-led globalization and rules-based systems is gone. The present is messier: countries build flexible, interest-driven alignments rather than strict blocs, even as the US and China abandon old rulebooks. Globalization hasn’t disappeared, but now it’s a “polyamorous” world—more dynamic, fragmented, and contingent than before.

“One thing you can say about polyamorous relationships is they tend to come with a lot of drama. Right? So definitely feels like we're going to have more instability, or at least more things in flux, more volatility.” — Tracy Alloway (50:02)

---

Listen for nuanced insights on global economic power, polyamorous international relationships, and the enduring challenge of building a durable, cooperative trade order in a divided world.

Transcript

[A]

Every business starts with an idea. How can you go from daydreamer to industry leader? Amazon Business accelerates your journey with smart business buying. Get everything you need to grow in one familiar place. From office supplies to IT essentials and maintenance tools. Amazon Business takes the buying experience you know and love from Amazon plus tools that help you save costs and make insights based decisions ready to bring your visions to life. Learn how at Amazon Business. Hiscox Small Business Insurance knows there is.

[B]

No business like your business.

[A]

Across America, over 600,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance for protection. Find flexible coverage that adapts to the needs of your small business with a fast, easy online [e-mail] that's hiscox.com there's no business like small business. Hiscox Small Business Insurance A great presentation can be the difference between success and failure. The difference between a good presentation and a great one. That's Canva. Canva brings your ideas together in one place with one powerful app. Use AI to move faster. Collaborate easily, because great things happen when people create together. No wonder 95% of Fortune 500 companies use it. Canva lets you bring your big ideas to life as fast as you can think of them. Put imagination to work at Canva. Bloomberg Audio Studios Podcasts Radio News.

[C]

Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthalm.

[B]

And I'm Tracy Alloway.

[C]

Tracy, you know, we're several months, I guess like five months or so recording this September 16th. Five months or so since Liberation Day since the trade war started. By and large, the world is still kind of working right. You could see its effects for sure in certain categories and so forth. But by and large, I don't think the contours of the economy look that much different than they did, say in March or April.

[B]

Look, I'm still missing my auction item that's supposed to be mailed from the Netherlands, so it has affected me directly.

[C]

Wait, what happened with it? Wait, wait, say more about that.

[B]

So I won something from a Dutch auction house and they were supposed to mail it in house shipping and instead of mailing it, they sent out an email saying that they can't mail it because everyone's trying to figure out the new tariff schedule and customs and things like that.

[C]

Oh, that's annoying.

[B]

I still haven't heard from them, but.

[C]

It still feels like something happened. There was some sort of rupture. Kind of a hard to imagine going to a March 2025 world again, but also hard to imagine going to a pre Trump one world ever. Like, it's hard for me to imagine that in my lifetime that there will ever be a sort of 2015 style trading relationship between the US and China. Well, I could be wrong.

[B]

Never say never.

[C]

But it's just hard for me to see at this point.

[B]

At this point, like, it's not a single administration. Right. We've had Trump 1.0 and then Biden continued a lot of the tariffs and even added some new ones. And then we have Trump 2.0 is arguably going even harder on China. So it does seem like at least a durable trend, not a flash in the pan.

[C]

And as we've discussed, you mentioned the fact that Biden was a continuation, arguably an expansion of Trump 1, particularly with some of the export restrictions on technology. Yeah. This is one of the rare trade. Rethinking the global trading system, whatever that means, is one of the rare areas of bipartisan consensus in D.C. as has come up in many episodes.

[B]

Yeah. That and housing.

[C]

That and housing. Right. That housing is very expensive. We really do have the perfect guest. Someone who has a very big picture view on trade. Someone who has been directly involved in trade negotiations. Someone who remembers the sort of pre TRUMP 1.

[B]

The long, long, long ago.

[C]

The long, long, long ago global trading system. And who could talk about whatever remnants of that are left or even maybe her who can explain to me what the global trading system was. We're gonna be speaking with Michael Froman. He is the president of the Council on Foreign Relations and he was the former US Trade Representative during the Obama II administration, 2013-2017. Has continued to write a lot about this topic. So, Michael Froman, thank you so much for coming on Outlaws. Thrilled to have.

[D]

Thanks for having me.

[C]

Absolutely. What does the US Trade Representative do? You had that job. I actually realized, I don't really know.

[D]

Like, it's. It's a great job. It really has the function of negotiating trade agreements. Okay. And enforcing US Trade rights under previous agreements. The reason I love the job is that it combines high diplomacy, sitting down with ministers, presidents, prime ministers of other countries trying to reach agreements, with having to have a really detailed understanding of elements of the U.S. economy. I mean, I learned more from American farmers teaching me the 500 things you can do with a molecule of milk and how they manipulate a molecule of milk to circumvent trade restrictions and get around tariffs. You export it as butter or as whey or as low calorie powder or whatever.

[C]

This is a whole episode A whole episode right there.

[D]

But that's only one example of the literally thousands of issues you have to learn as US Trade Rep to be able to sit down with your counterparts in other countries and negotiate agreements.

[B]

Can you give us an idea or a sense of the average negotiation? What exactly is the process like? Do you meet for the first time in a designated room somewhere or is there prep that goes into these? You're exchanging emails, what exactly happens?

[D]

So in the, in the, in the past and of course it's a very different situation now, but in the past the US or another country might come up with an idea of what they wanted to do in a trade negotiation. A set of issues they wanted to take on, a set of countries they wanted to negotiate with. And they would go around and do consultations with other countries, float the ideas, see what kind of feedback they got and scope out the nature of the negotiation. Is it going to be just about goods and tariffs? Is it going to touch upon agriculture and regulations and services and labor and environment and all various other issues that have become part of trade negotiations in the past and get agreement by the other countries that this was the agenda? And then in the past, usually it's the US that has been sort of driving the agenda. These would be the topics we would deal with. The US would come up with proposals of what are the disciplines that we would like to see in each of these areas? What are the rules that we'd like to see? And it was the way the US brought other countries along to adopt high standard rules across one sector or one subject matter or another. And the idea was we know we live in a high wage, highly regulated economy. We compete with economies that oftentimes have lower wages, lower regulation. And if we could raise other countries standards closer to our own, it would level the playing field for American workers and farmers and ranchers and make it easier for us to compete.

[C]

I mean, for better or worse. It really just seems like a totally different era now. The idea of getting to the idea of going back to some world where the US is actively working with a bunch of country on rules rather than rates, tariff, it really does seem, it seems like ancient history now. It just seems right.

[D]

Look, I think that's right. First of all, I think the international trading system had been under stress for some time. President Trump in some ways put was the final nail in the coffin of it. But the global multilateral rules based system, that's like the WTO, the World Trade Organization, where 160 plus countries got together, agreed to a set of rules agreed to some mechanisms for enforcing those rules and for monitoring them. That's been under stress for, for a long time. There's been dissatisfaction and I think now in fact is. You're, you're right. I think we can't go back to the way things were pre Trump. We're gonna have to think about what comes next.

[B]

Just to play devil's advocate for a second, to what extent did we actually have a rules based trading system in the sense that everyone was actually beholden to the same limitations or the same rules? Because looking back, there were always accusations about China cheating or maybe the US was taking advantage in some way. And in fact, you could argue that that sense of unfairness is kind of what got us to where we are today. So was it really rules based for everyone?

[D]

So I think we have to look back at the whole history of the post war period because for decades China wasn't a factor. It wasn't part of the global trading system, it wasn't a major economy. And it was the US and Europe, Japan, others who came together to really form this set of rules. And it's never a perfect system. My sense is what rules means is that most countries follow most of the rules most of the time. Not that it's 100% perfection, by the way. That's true when you have laws in the United States. We have laws in the United States because people do commit crimes. The existence of laws does not prevent people from committing crimes. That's why you need enforcement. Same thing is true on the international side as well. The big difference is, as you pointed out, Tracy, is when China became a major factor in the global economy and began to integrate globally, on one hand there was an opportunity to say, okay, this is an opportunity for bring China into the global system, get them to adopt the set of rules that the rest of us have all agreed to because they appear to be on this path towards market reform, openness, liberalization.

[B]

Right.

[D]

I think what happened in reality is that trajectory wasn't as linear, didn't go as far, didn't go as fast as people anticipated. And what we did not anticipate is that somebody like President Xi would come in and in fact stop or reverse it. And so now we have an economy that is huge, second largest economy in the world, biggest manufacturing, part of the global economy, likely to be accounting for something like 45% of all global manufacturing in a few years, which is the biggest that any country has ever been in history. And it's following a fundamentally different set of rules. And that has led to a lot of the stress in the international system.

[A]

This message is brought to you by Nuveen. How would you invest if you knew the future was watching at nuveen? This isn't a theoretical question. It's a perspective that comes from navigating 125 years of market cycles, using foresight to innovate and adapt to the changing needs of investors around the world, and remaining steadfast in the pursuit of lasting performance for clients, communities and the global economy. Nuvem invest like the future is watching. Visit Nuveen.com future to learn more. Investing involves risk, principal loss as possible Time for a sofa upgrade? Visit washablesofas.com and discover Annabe where designer style meets budget friendly prices with sofas starting at $699, Annabe brings you the ultimate in furniture innovation with a modular design that allows you to rearrange your space and effortlessly. Perfect for both small and large spaces. Anime is the only machine washable sofa inside and out. Say goodbye to stains and messes with liquid and stain resistant fabrics that make cleaning easy. Liquid simply slides right off. Designed for custom comfort, our high resilience foam lets you choose between a sink in feel or a supportive memory foam blend. Plus our pet friendly stain resistant fabrics ensure your sofa stays beautiful for years. Don't compromise quality for price. Visit washablesofas.com to upgrade your living space today with no risk returns and a 30 day money back guarantee. Get up to 60% off plus free shipping and free returns. Shop now at washablesofas.com Offers are subject to change and certain restrictions may apply in business.

[D]

They say you can have better, cheaper or faster, but you only get to pick two. What if you could have all three at the same time? That's exactly what Cohere, Thomson Reuters and Specialized Bikes have since they upgraded to the next generation of the cloud. Oracle Cloud Infrastructure OCI is the blazing fast platform for your infrastructure, database, application development and AI needs where you can run any workload in a high availability, consistently high performance environment and spend less than you would with other clouds. How is it faster? OCI's block storage gives you more operations per second cheaper. OCI costs up to 50% less for computing, 70% less for storage and 80% less for networking better. In test after test, OCI customers report lower latency and higher bandwidth versus other clouds. This is the cloud built for AI and all your biggest workloads right now with zero commitment. Try OCI for free. Head to oracle.com strategic that's oracle.com strategic.

[C]

Can you explain maybe the philosophical premise behind the idea that trade with China, I guess why do we care about what their internal rules are? Right? Theory of trade, it's sort of okay, they're cheaper for whatever reason or they're more efficient, etc. And so, you know, comparative advantage, we benefit from, from that. Why does the global trading system, why is it, or was it, or is it premised on this notion that all of the participants would trend in some sort of more liberal direction with their domestic economies?

[D]

You know, I think it's because the actions that China has taken domestically to drive their really quite remarkable economic growth over the last few decades does have ramifications outside of China, has ramifications for the rest of the world, for manufacturing in the rest of the world, for, for other factors. And so it's, it's not something that can be limited to China. If China gets to where it's going because it steals intellectual property, because it produces over capacity. So it produces, it creates far more factories than it needs to for the reasonable demand for a product in order to drive other producers out of the market in other countries that has an adverse effect on us. If they subsidize state owned enterprises or even private enterprises in such a way that it creates this unlevel playing field, then it affects the rest of us as well. And I think that's what's really happened is that China, whether it's a state owned enterprises, subsidization, intellectual property rights, theft, government intervention into the private sector, all towards positioning China as the leading manufacturer. But it has come at the expense of other industrialized countries, in some cases other emerging economies. And that's why there's been this counter reaction.

[B]

So I know you were a trade representative before the tensions with China really ramped up under the first Trump administration. But how were you thinking back then about incentivizing other countries when it comes to trade negotiations like carrot and stick strategy? Was it mostly about incentives and if so, what were you giving them? Or was it sometimes maybe threats?

[D]

So you have to use both. I think on the threat side it's not really threats. It was enforcement that we would bring cases against countries, including China at the WTO or against other trading partners where we had arrangements if we felt that they were violating our rights under those agreements we brought during the Obama administration, I think we brought the most cases ever brought against China. We won all the cases that got to conclusion the problem was China would find ways either of delaying implementation or by the time the fix was implemented, the relevant industry in the United States or elsewhere was gone. And so it was really sort of cold comfort. And that's one of the challenges, I think, that we saw in the. In the World Trade Organization. I think, on the incentive side, that's where trade agreements, real trade agreements come into play. I was involved in something called the Trans Pacific partnership, which was 12 countries around the Asia Pacific region that were working on opening their economies to each other, abiding by a high standard set of rules. Some of the countries already had free trade agreements with us. About half of them did. So we weren't giving them any more access to our economy. We'd already given them access, but at the table, we had Japan. And Japan was an economy that had never really opened up to other markets. And these other countries knew that they couldn't get Japan to open on their own. But if the US Was pushing Japan to open, they would benefit from it. So you had countries like Peru or Chile who already had free trade agreements with us willing to raise their labor standards or willing to enforce environmental laws because they were getting access not to our market, but to Japan. And that incentive was one that was powerful for them.

[C]

That's a very. That's a very interesting dynamic. Talk a little bit more about those years, 2013, pre Trump, and the actions toward China, because if you said by that point, Obama had already introduced a record number of actions against China winning many of them. Winning all of them.

[D]

Did you say all of them that went to conclusion?

[C]

All of them that went to conclusion. But it didn't really matter because either there was some way to evade or the US Industry had been decimated. Was there something pre Trump? I mean, I don't know. Whenever that Was there a feeling that something has to change fundamentally in how the US And China trade or the rules governing that trade, even at that point?

[D]

No, absolutely. Look, the. The day one of the Obama administration, the. The world had been involved in something called the Doha Round of negotiations at the World Trade Organization. It'd been going on since 2001. And I remember going to a G20 summit. There was one in April in London. And all the other leaders around the table here was the new president of the United States on their mind was asking him, okay, what are you going to do to bring the Doha Round to successful conclusion this year? And the president said, all right, we're going to go back and take a look at this. And he asked a group of us to do a study. And by the summer we had come back to him. And said, this Doha Round isn't going to get done. The Doha Round was founded on this fundamental premise in 2001 that basically developing countries, it was called the Development Round. And the primary beneficiaries of the Doha Round would have been developing countries, not industrialized countries. And the fundamental premise was developing countries shouldn't have to live by too many rules, industrial countries should, and this would help the developing countries catch up. By 2009, when we saw what had happened with China between 2001 and 2009, there was no way that an agreement that gave China a pass on rules so that it could continue to expand its manufacturing and undermine manufacturing around the world that that was going to fly. And the President went back to the other leaders at the next G20 meeting and said, the Doha Round is not going to get done on the path it is currently on. And I remember we were at a G20 summit and the other leaders all went around and read their talking points. The traditional talking point at the time was Doha Round will get completed by December this year or by the ministerial this year. And you know, President Obama intervened, he made his point, the other leaders read their talking points and he put his flag back up and said, you know, you guys aren't listening, this isn't going to happen. And that was the first indication that something needed to change. Yeah, and then we were sitting down with the Chinese bilaterally in lots of consultations, sort of unending consultations, and we'd have this conversation with them and remind them that their tremendous success was based on a benign international environment, the capacity to export to the rest of the world. And that if we didn't address these underlying concerns, state owned enterprises, subsidization, IPR rights, et cetera, that benign international environment was going to disappear. And that of course is exactly what's happened. And that's the bipartisan consensus against China that has now emerge. We started warning them of that back in 2009, 2010, and I think we made some modest progress during the Obama administration to get them change certain, certain practices. But by the time President Xi came in and made it clear he was going to be dominant in the following sectors, he was going to reduce his dependency on the rest of the world and increase everybody else's dependency on China, the game was over.

[B]

Actually, this leads into my next question, which is we've talked a lot about how, you know, there was this break in the rules based liberal trading order. Was there a single moment where you went like, aha, this has fundamentally broken, instead of just like Slowly declining, slowly changing. Was there something that sticks out to you about, wow, this is actually changing right now.

[D]

So I, I think that Doha moment back in 2009 was one of them. I also think later on in, in the Obama administration, we were trying to negotiate an agreement over environmental goods. It was a list of 250 or so products that would have been good for countries to buy more of and produce more of because it was good for the environment, for climate change or otherwise. And it failed. It failed over bicycles. That between China and the eu. The EU is protecting the Polish bicycle industry. China wanted to put bicycles on the list and they couldn't agree on what to do with bicycles. And so the entire agreement fell over that one issue. And to me it sort of underscored, okay, we're pretty far from reaching consensus that if we can't reach agreement over bicycles, we're not going to reach agreement over things that are much more meaningful.

[C]

Were you surprised at all? I want to start to move a little bit closer to the present. But before we go to the present, was it inevitable that in your view that the Biden administration ended up as a continuation slash expansion of some of the Trump restrictions? Was there still an opportunity to turn somewhere closer to a pre Trump path?

[D]

I think there was an opportunity to make some changes, but not go back to the way things were before. The Biden administration, for example, launched a review of the China tariffs. And I think in many respects the Biden administration was very strategic in how it approached export controls and foreign investment constraints. It was very targeted, the tariffs. They launched a review to try and distinguish between strategic and non strategic tariffs. There's a case to be made for tariffs if there's unfair trade practices or if it's a product that you really need to produce here in the United States. You don't want dependency. But do we need tariffs on T shirts and underwear and socks? Is that important to our national security? And they never got themselves to the position of reducing those tariffs. And to me it's not necessarily a criticism of the Biden administration. I think it just goes to show that tariffs are easy to put on and hard to take off because once they're on, there are constituencies that are supportive of them. And any movement to reduce tariffs, particularly in this political context, is seen as being weak on China, even if it makes pure sense from a economic point of view. Who, who is hurt most by tariffs on underwear, T shirts and socks? It tends to be low income Americans who spend a disproportionate amount of their disposable income on imported goods. And you know, we could afford to bring in those products from China without.

[B]

Questioning our national security, without losing our strategic underwear producing capacity. Although I think the US Military does actually have some strategic clothing.

[D]

There are restrictions under, I used to call it the Department of Defense, the Department of War that require uniforms, footwear and other things to be made in the United States.

[B]

Fun fact. How would you actually describe the current state of the global trade system? Because, you know, I've heard people say there are shades of mercantilism, protectionists, that sort of thing. What's your description of where we are right now?

[D]

Well, I think the challenge of where we are right now is you have the two largest economies in the world, the US And China, basically following their own set of rules rather than the multilateral rules based system that the US was very much driving the creation and the defensive over all these years. And when you have the two largest economies doing that, the question is, well, what are the other economies going to do? Are they going to start imitating the US Or China? Will they continue to abide by the rules if nobody else does? I think they're all sort of wrestling with that question because for, for some of them, like the European Union, European Union is more ideologically in favor of free trade integration, the rules based system, the whole notion of the European Union is based on that, the bringing the European countries together, let alone the rest of the world. So it's harder for them to make this leap than it has been for the United States. But I think the reality is that the system is under great stress and we're going to have to think through how does it evolve? What are the elements of it that we want to try and preserve or reconstitute? And how does it need to change to take into account not only the lessons of the last 80 years prior to Trump, but the lessons of the Trump administration, some of which will be instructive.

[A]

Life's messy. We're talking spills, stains, pets and kids. But with Annabe you never have to stress about Messes again. @washablesofas.com Discover Annabe Sofas, the only fully machine washable sofas inside and out, starting at just $699. Made with liquid and stain resistant fabrics. That means fewer stains and more peace of mind. Designed for real life, our sofas feature changeable fabric covers allowing you to refresh your style anytime need flexibility. Our modular design lets you rearrange your sofa effortlessly. Perfect for cozy apartments or spacious homes. Plus they're earth friendly and built to last. That's why over 200,000 happy customers have made the switch. Upgrade your space today. Visit washablesofas.com now and bring home a sofa made for life. That's washablesofas.com offers are subject to change and certain restrictions may apply. Every business has an ambition. PayPal open is the platform designed to help you grow into yours with business loans so you can expand and access to hundreds of millions of PayPal customers worldwide. And your customers can pay all the ways they want with PayPal, Venmo, pay later and all major cards so you can focus on scaling up when it's time to get growing. There's one platform for all business PayPal open grow today at paypalopen.com loans subject to approval in available locations hey, it's.

[D]

Ryan Reynolds here from Mint Mobile.

[C]

Now I was looking for fun ways.

[D]

To tell you that Mint's offer of unlimited Premium Wireless for $15 a month is back. So I thought it would be fun if we made $15 bills, but it turns out that's very illegal. So there goes my big idea for the commercial. Give it a [e-mail] switch upfront payment.

[A]

Of $45 for 3 month plan equivalent to $15 per month required new customer offer for first 3 months only speed slow after 35 gigabytes of networks busy taxes and fees extra see mintmobile.com let's.

[C]

Talk more about some of the paths that things could go because I'm thinking about setting aside even the Europe, Europe and the U.S. you know, there was the BRICS gathering recently. These are, there are a lot of countries whose own developmental trajectory could be undermined by China's manufacturing success. Right. And yet perhaps because of the actions of this administration, et cetera, they don't feel that there is a sort of comfortable home or friend in D.C. and that maybe it makes more sense for them, even given the competitive challenges, to be friendlier with Beijing, et cetera. What is your view on that? Do you believe there could be a new I mean, one thing we've heard, we were talking to we recently interviewed Robert Kaplan, vice chairman over at Goldman Sachs. His view was globalization is alive and well. It's just that the US Isn't really part of it and that we're actually reemerging sort of free trade, et cetera, except it's with China at the helm. Is that a fair characterization? Like what is happening with these massive other countries as they think about who their partners and friends are?

[D]

So first of all, I think globalization is not over. Other countries continue to move ahead to integrate their economies. European Union has signed additional trade agreements with mercosur, they're working on one with, with India. Africa has a continental wide free trade agreement signed a few years ago that they're in the process of implementing. So I think Robert Kaplan's observation that it's the US that has exempted itself is to a certain degree correct. I'm not sure the next step is that this is all going to shift to China and it's going to be a China led bloc because there's no country that's more concerned about the potential adverse impact of Chinese exports on their own manufacturing and economic aspirations than India. India and you could add Brazil, you could add Indonesia, you could add South Africa. They're all deeply concerned that if the US and Europe begin to close their markets, all that excess capacity from China has to go somewhere and it could well get dumped in their markets and hurt their capacity to build up their manufacturing base as well. And so I, I've been of the view that, you know, we, we had this, the, the Cold War was about bipolarity. U. S Soviet Union, the, the wall came down, Soviet Union was dismantled and that was kind of a unipolar moment. That's over now. That 30 year period is over. What we have now isn't multipolarity. It's not like you've got two or three camps that do everything together. A China camp, a US Camp, some other camp. I think it's really more akin to like polyamorous life. Right. Like in India is the perfect episode title.

[B]

That's right.

[D]

India is the greatest, is the greatest example of this. India loves the United States at least until recently, for technical technological cooperation, for civil nuclear cooperation, for investment, for the relationship between the Indian diaspora and our, you know, entrepreneurial ecosystem here. They love Russia for oil, for arms, they love Iran for oil. They love and they hate, depending on the day they've had, it's one of the countries they've gone to war with, you know, on their border they've had skirmishes, people have died in armed conflict between India and China. But then as you saw recently, there was a, a conference in China where you had Modi Xi and Putin holding hands, walking down the red carpet together. So I think India is archetypal example of trying to play these relationships.

[C]

They always were during the Cold War too, right? They were the non aligned.

[D]

That's right. I mean it's changed now. Then they were non aligned. Now I think they're multi aligned, so they'll be aligned with the polyamorous. And you could use the same analysis too, I think cover a lot of other countries, a lot of the other middle countries. That makes it a much more complicated world. You know, in retrospect, the Cold War was very simple. It was black and white. You were with us, you're with the Soviet Union, you know, and there were some proxy wars in between, but it was pretty, it was pretty simple. This is much more complicated and it leads to the, the view that you're going to have to be very proactive and creative in creating coalitions of the willing around various issues because sometimes India might be in it, sometimes they might not, sometimes China might be in it, sometimes not. And I think that's the, the challenge for, for the United States to continue to exert leadership going forward.

[B]

How resilient would those smaller coalitions of the willing actually be? Because I can imagine maybe it's easier to negotiate with a smaller group. Maybe you don't get caught up in debates over bicycles and things like that. But on the other hand, if you don't have like a big trading partner who is necessarily driving the agenda, it seems like it might be a little bit more difficult to enforce.

[D]

I think you need a combination of smaller groups of like minded countries. But it does to your point, Tracy, require leadership. And in the past the US has been a leader of it. I mean you've got some very strong examples like NATO. You know, a military alliance is the strongest example of a plurilateral group. So something less than the whole world. But like minded countries that have agreed to do certain things together because they have a common interest to do so I'm not sure it would exist without US leadership and us driving it going forward. That was true of the Trans Pacific Partnership as well. I think it could be true of a number of these other things. And by the way, China is very good at this. I mean the conference, the Shanghai Cooperation Organization conference that they recently held where Modi and others were present, that's a good example of them pulling together coalitions. BRICS is another good example. Now we can talk about the strengths and the weaknesses of BRICS and where the countries actually have common interests and conflicting interests. But it's that kind of drive that you need a leader and you need a group of like minded countries.

[C]

Let's talk a little bit more about some of these tensions that emerge because it does sound like, you know, brics. BRICS is a nice acronym that Jim o' Neill from Goldman Sachs Asset Management came up with in 2001 and which may now be, you know, this important geopolitical entity. We'll see. We don't really know for sure yet, but it seems like one possibility is that, okay, the U.S. we feel that we need to have in key strategic sectors some sort of capacity to build semiconductors or maybe capacity to build batteries. At least there was a big push under that, under the Biden administration. Of course China has that and it's growing. I mean, when people think about the economy going forward, is there a risk that essentially every country feels they have to make that decision, that India feels it has to have its own battery making capacity, that Germany feels it has to make its own battery making capacity and that there is a sort of domino effect and we just wind up in a much costlier, less efficient world?

[D]

Well, I think we are heading towards a costlier, less efficient world. I'm not sure that's necessarily a bad outcome in that to, to go down the path of greatest efficiency could be to, at least in the short run to become utterly dependent on China for all of this product because they can produce things cheaper. Not, not, not always because it's cheaper labor, but because they become very efficient infrastructure.

[C]

Massive scale.

[D]

Massive scale. And I think the question is, is, is it a good thing? I mean, is it that the US have a battery industry and that Europe have a battery industry? It's probably a good thing. It may not be as efficient as relying completely on China, but having that diversification, particularly over the long run, is a positive rule number one of, of risk management diversification. And yet we became very complacent and very, became very complacent over the years of just relying on China as our manufacturing floor. And now I think companies have come to the conclusion whether it was because of natural disasters Covid or political intervention as we've seen with, with China, that it's, it's to their benefit, their economic benefit, even over the longer run to diversify, even in the short run if it's more expensive.

[B]

With your trade representative hat on, can you maybe say something about how you view military strategy and I guess trade and this idea of well, maybe we want to be independent, maybe we want to have independent capacity in something that's strategically important like semiconductors or I don't know, making ballistic missiles or something like that. How does the US Government actually think about the relationship between trade and military might?

[D]

So I think over time, broadly economics and national security have converged into economic security and we're sorting through what that means in practice. So in the case of the Biden administration, they talked about a small yard and a high fence. So take a limited number of technologies and say, these technologies we refuse to export to our competitors and our adversaries. We refuse to allow them to buy US Companies that specialize in those technologies and refuse our companies to, who dominate that area to invest in China and give them their capacity. But it was a relatively few sectors, relatively few technologies. The question is there an inexorable set of pressures to expand that yard and to add more and more things to it, and where is it appropriate and where is it not appropriate? And I think that's what we're now sort of wrestling with. We're highly dependent on China for all the ingredients that go into our pharmaceuticals. Do we feel comfortable with that? China's done nothing to say they would cut it off, but they could. And we've seen recently, China has used its choke point capacity, rare earths, magnets, to demonstrate that it has leverage, too. And it worked. The Trump administration raised tariffs to 145% on China. China restricted the export of certain rare earths and magnets. And suddenly there was a de escalation. And so we have to now wrestle with that and decide over the long run, what products do we actually need to be made in the United States because they're so critical to national security or our sense of national security, and which ones? And this is where there's been, I think, insufficient attention. Which ones can we rely on our allies and partners? Because we probably can't produce everything, at least in the short run, or wouldn't make sense to produce everything ourselves, but can we rely on Canada and Europe and Japan and South Korea and Mexico for some of this production, or in India? And how do we differentiate between which products fit in what group? And therefore, then what do we need to do about it? To drive production here where necessary, and to develop the relationships with the allies and partners where possible?

[C]

The idea of friend shoring, or whatever you want to call it, sounds very intuitive. And it's like, we don't need to build a ton of shipyards. Maybe we could get the Koreans to do that for us. Or I don't know, the. Probably the Finns are good at it, I'm not sure, etc.

[D]

The Finns are very good.

[C]

Oh, the Finns are the icebreaker. Yeah, that's right. One of these facts that we've learned over the years. But is there, I mean, when you look at the current administration, do you see anything Other than widening a gulf between those partners. Like, yeah, it sounds great to have a nice relationship with the Koreans for them to build more ships for us, and then that solves the problem of scale and redundancy and etc. But in practice, from your perspective, is it going the opposite direction?

[D]

Well, look, I. I think one of the challenges of, of any administration, but it's certainly evident in this one, is the connecting of dots between one policy objective and another policy objective. And so, yes, in the short run, it's going to take us a while to build up our shipbuilding industry, and it's going to require a lot of government support, and it's going to require a lot of policies that we've not yet adopted. Perhaps it's something we should do, but it will take years to really build that up. In the meantime, should we look to Korea? Should we look to Japan? Should we look to Finland for the ships that we need right now? That's one set of objectives. Then you have the raid on the Hyundai plant, which was another set of objectives. Objectives around migration, illegal migration and illegal workers. I sometimes wonder whether the dots are being connected within the administration or whether there's a view and they may be right, they may be wrong, that they can have it both ways, that they can come down on Korean workers in the United States and still look to Korea and say, you will deliver US.

[B]

Chips and share your expertise and technical knowledge and all that and help us.

[D]

Build ship building here in the United States.

[B]

I want to broaden out the conversation.

[C]

Michael's being very ambassadorial, by the way. Anyway, keep going.

[B]

Of course. Just to broaden out the conversation, though, back in March, I wrote an odd thoughts newsletter titled the US Is Looking a Lot Like China. I got an enormous amount of pushback on it, but you actually wrote something similar. And I don't even have a question. Just tell me that I was right.

[D]

You're right. You were right.

[B]

Thank you.

[D]

Look, I think we spent years, We. We always thought there was a theory of convergence. By bringing China into the international system, we would become more alike. Now our view was they would become more like us.

[B]

Like us?

[D]

Yeah. More open, more liberal, more market oriented. And we used to go to them and lecture them about don't be protectionist, don't restrict foreign investment in your country, don't make it impossible for our companies to invest in your company, don't engage in industrial policy and subsidization, and don't take stakes in private companies and intervene in the private sector. And now what are we doing? We are protectionists. We have restrictions on foreign investment. We are engaged in limited industrial policy. And now we're beginning to take stakes, government stakes in private companies. So rather than them becoming more like us, we have become more like them. And the challenge of that, I think, is that we're now competing with them on their playing field under their set of rules. I'm not at all convinced that we can compete on their playing field as well as we can compete on ours because we don't have unlimited. We can't go to Congress and say, give us unlimited limited resources to invest in this sector after, after that sector. We can't subsidize, you know, the, the commanding heights of, of the technology competition. And I think it's, it's unfortunate because I think the Chinese can play that game much better than we can.

[B]

Yeah, I think this is a really important point because when we're thinking about, you know, choke points in terms of manufacturing or whatever, China has the most experience out of practically anyone in the world of like, building up strategic capacity and doing it in a very conscious and interventionist way.

[C]

Well, and also a lot of that sort of massive oversupply that people call it is maybe to some extent intentional, but maybe also just to some extent a function of their provincial versus provincial relationship where the provinces are hyper competing, et cetera, for market share. That's just a dynamic. Nothing like that exists in the United States. And so the idea of moving in that direction, all kinds of conditions, either by design or just sort of by happenstance of the political structure of the system is just very different.

[D]

No, exactly right, Joe. I think in their case, leadership says we want to be dominant in these 15 sectors. Every provincial governor looks at that and says, all right, I'm gonna take my.

[B]

Local state judged on the ability to produce this.

[D]

And we have, you know, in China, I think there are over a hundred EV companies.

[C]

Right.

[D]

You know, and so. And they're producing, and they will be producing enough cars for. To meet the demand of the entire world. So where does that leave the U. S. Auto sector? Where does it leave the, the European auto sector? Now, in our case, I think, you know, we have effectively kept them out. We've effectively said we're not going to have Chinese EVs here, at least at the moment. Europeans have a slight more schizophrenic about it. They've also adopted protectionism, but they're more open, I think, to having Chinese imports. What does that mean for the future of Volkswagen, for the future of Renault, for the future of the other auto companies. And, you know, in that case, it could have broad political implications in Europe as well over time.

[B]

I hesitate to ask this question, but is there anything the US can learn from China in terms of, you know, trade and building out strategic industries?

[D]

Well, look, I think China, we shouldn't make China into more than it is. China's made huge mistakes. They've wasted hundreds of billions of dollars on bad domestic investments. And they've got, you know, tremendous challenges, including demographic challenges that the US Currently doesn't have. And so we shouldn't make them out to be, you know, 12ft tall. I think one thing that is current is to think through, okay, if there is an industry that you think is important for national security or otherwise, what's the best way of supporting it by the government? The Trump administration's approach, I think, has been based largely on tariffs, right? That if we create this wall of tariffs, companies will have to produce or have to move their supply chain to the United States, and that's how we'll build out this area. I think what we've seen in China is that, yes, they've used tariffs and other restrictions. They've also used industrial policy. They've also invested subsidies, credit, free energy. You know, they've also invested heavily in R D in many sectors, the life sciences, obviously, AI, among others, government subsidies and government investment. And it's that combination of policies that probably is more effective than tariffs alone. To me, the concern is we're approaching this from a position of tariffs are the answer to everything. We know what the cost of tariffs are, and we're taking a gamble on whether the benefits will be there and whether tariffs alone are going to remanufacture the United States economy.

[C]

You mentioned that some degree of greater redundancy and higher costs is not the end of the world, particularly if there's some political. It creates some political sustainability. What does the left tail risk look like to you? What is the scenario in which the wheels really come off?

[D]

One, the US doesn't have a great history with industrial policy. So if we were to multiple multiply our efforts in various ways but not do it well, that would be a waste of resources and costs that we didn't need to need to incur. I think if we don't go back to the point about allies and partners, if we insist on reshoring everything and not friendshoring anything, I think we probably lose some of the economies of scale and some of the comparative advantage that we have. I also think if the existential threat is Competition with China, if they are the pacing challenge, working with allies and partners is our way to reach scale. We're a big economy. We're the biggest economy in the world. But when it comes to manufacturing, we're not going to be able to compete with China alone necessarily. Or rather, we're going to be able to compete with China much better if we do so with our allies and partners.

[B]

I have just one more question. This is the most important one. How good are you at Tradle? Do you ever play that?

[D]

We do. I love these games. Tradle and Worldle.

[C]

Oh, Worldle. Yeah, that's the other one. I didn't get into them.

[D]

Yeah. But Tradal, I think, is great, is a great game. I don't always get it right, but it's a good reminder of just how complex certain economies are.

[C]

After we're done with this, could you help us find that dairy farmer who explained the 500 different.

[D]

Absolutely. It's a fascinating lesson.

[C]

Michael Frohman, thank you so much for coming on ODD Love.

[D]

Thanks for having me.

[B]

Thank you. That was great.

[C]

Tracy. I'm really. I'm really a fan of this neologism or wherever it came from, the polyamorous world order, because, you know, people talk about the. The G7 and what's his name talks about the G0 and other people talk, oh, bipolarity. But. But I think this is a good one.

[B]

It is kind of funny to me that there's this idea out there that just because Goldman came up with like a catchy acronym for the bricks, that somehow that's going to like, create a new strategic coalition from, like, so perfect countries.

[C]

We should have Jim o' Neill on to talk about. We've never talked to Jim o'. Neill. And so the thought of him coming up with this paper, these are going to be the big economies. And now they. Now that it's a rival block to the west is like a really good.

[B]

Oh, that would be really interesting. But I do think. Okay, one thing you can say about polyamorous relationships is they tend to come with a lot of drama. Right. And so definitely feels like we're gonna have more instability or at least like more things changing, more things in flux, more volatility.

[C]

So this idea that I find it compelling, this idea that the old globalization can't just be replaced with the same globalization, except the leader has changed. Right. I mean, the US Was this huge trade deficit country. China is a huge trade surplus country. That naturally means that its relationship with all of its partners, on some level, even if it wants to be at the forefront of creating new terror free zones, et cetera is going to be of a different type than the relationship that the US Had.

[B]

Absolutely. Shall we leave it there?

[C]

Let's leave it there.

[B]

All right. This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

[C]

And I'm Jill Wiesenthal. You can follow me at the Stalwart. Follow our guest Michael Froman, he's Ike Frohman. Follow our producers Carmen Rodriguez at CarmenArmond, Dashiell Bennett at Dashbot and and Kalebrooks and Kalebrooks. For more Odd Lots content go to bloomberg.com oddlots where the Daily newsletter and all of our episodes and you can chat about all of these topics 24. 7 in our Discord, Discord GG oddlots.

[B]

And if you enjoy Odd Lots, if you like it when we talk about the future of global trade, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to a all of our episodes absolutely ad free. All you need to do is find the Bloomberg Channel on Apple Podcasts and follow the instructions there. Thanks for listening.

[A]

Life's messy. We're talking spills, stains, pets and kids. But with Annabe, you never have to stress about messes again. At WashablesOfAs.com, discover Anabe Sofas, the only fully machine washable sofas inside and out starting at just $699. Made with liquid and stain resistant fabrics, that means fewer stains and more peace of mind. Designed for real life, our sofas feature changeable fabric covers, allowing you to refresh your style anytime. Need flexibility? Our modular design lets you rearrange your sofa effortlessly. Perfect for cozy apartments or spacious homes. Plus they're earth friendly and built to last. That's why over 200,000 happy customers have made the switch. Upgrade your space today. Visit washablesofas.com now and bring home a sofa made for life. That's washablesofas.com offers are subject to change and certain restrictions may apply.

[D]

Fox 1 is now live. It's the new way to stream all your Fox favorites all in one place. That means NFL Sundays and college football games, breaking news with the Fox voices you trust and your favorite shows streamed as they happen. So nothing gets spoiled. With Fox one, you get it all live. Edge of your seat plays, jaw dropping moments, and that feeling like you're right there in the action. Start your seven day trial today. Offers are subject to change. Go to Fox one for complete terms and conditions. Fox one We Live for Life streaming now.

[A]

Every business has an ambition. PayPal open is the platform designed to help you grow into yours with business loans so you can expand and access to hundreds of millions of PayPal customers worldwide. And your customers can pay all the ways they want with PayPal, Venmo, pay later and all major cards so you can focus on scaling up when it's time to get growing. There's one platform for all business PayPal open grow today at paypalopen.com loans subject to approval in available locations.