Chinese Deals & Jet Fuel: U.S. Ambassador to China & RyanAir CEO 5/18/26

Summary

Squawk Pod: "Chinese Deals & Jet Fuel: U.S. Ambassador to China & RyanAir CEO"

Date: May 18, 2026
Host(s): Andrew Ross Sorkin, Joe Kernan (Becky Quick out)
Guests: David Perdue (U.S. Ambassador to China), Michael O’Leary (Ryanair CEO)

Episode Overview

This episode dives into the aftermath of President Trump’s summit with President Xi Jinping in Beijing—focusing on trade agreements, U.S.-China relations, and continued ambiguity over U.S. policy on Taiwan. The episode also explores the impact of surging jet fuel prices in Europe, with Ryanair CEO Michael O’Leary providing candid insights into how airlines are navigating ongoing fuel cost shocks, competition, and policy blunders. The show weaves in sharp on-air banter, economic commentary, and market updates.

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Key Discussion Points

1. Market and Economic Rundown

Summary of where the markets stand, rising treasury yields, and oil prices.

• U.S. bond yields: 10-year at 4.5%; 2-year near 4%

• Energy sector: WTI crude at $106, Brent at $110, sector’s best week since late 2024 (02:21)

• “It’s been their best week. Not if you own oil stocks. Bad for everybody else.”—Andrew Ross Sorkin ([02:31])

• AI tech focus: Nvidia earnings highly anticipated, commentary on frothy markets

  • "Industry bellwether Nvidia is going to report on Wednesday. Analysts are expecting the company to beat street forecasts. ... The stock nearing another all time high." —Andrew Ross Sorkin ([03:44])

2. China Trade Deals & U.S.-China Summit

• Post-Summit Outcomes:

  • China agreed to buy at least $17bn in U.S. agricultural products for the next 2 years.

  • Boeing deal: ~200 planes, 400-450 GE engines, opening up beef and poultry markets ([18:26])

  • China’s President Xi to visit U.S. in September

  • U.S. and China establishing boards of trade and investment

  • "President Trump and President Xi have a strong relationship. ... They're developing a trust and more trusting relationship now." —David Perdue ([18:26])

3. Taiwan Status and U.S. Policy: Strategic Ambiguity

• Ongoing Debate:

  • President Trump called proposed arms sales to Taiwan a “bargaining chip” in talks with China, prompting concern and confusion.

  • Both sides reaffirm “no change” to U.S. policy but comments bring ambiguity.

  • "President Trump made it very clear ... that we're not changing the American policy on Taiwan. We fully support the Taiwan Relationships Act—the three communiques, the six assurances. We don't support independence, but we also don't want to see coercion." —David Perdue ([21:05])

  • "There's a difference between selling weapons and actually getting involved in a hot conflict." —Joe Kernan ([11:21])

  • "It’s called strategic ambiguity. So like, we’re trying to talk about something and it’s designed to be ambiguous. No one knows anything." —Joe Kernan ([19:50])

4. State of the Chinese Economy and U.S.-China Relations

• Structural Headwinds:

  • Demographics: "The one-child policy ... that demographic catastrophe is beginning to hit home here now." —David Perdue ([26:31])

  • Real estate remains unresolved—contrasted with U.S. post-2008 recovery.

  • Trade deficit with U.S. down 30% in last year.

  • "They have headwinds...but it is certainly going to muddle through. Not unlike maybe what we did after our 0809 issue" —David Perdue ([29:37])

• Leadership Dynamics:

  • Xi Jinping’s focus is long-term (2049 centennial), less directly accountable to public in Western democratic terms.

5. Geopolitical Tensions: Strait of Hormuz and Oil Markets

• Strait Significance: 48% of China's oil passes through, 15% from Iran, rest from Gulf states.
  • Both China and U.S. agree Iran shouldn't have a nuclear weapon; want Strait to remain open.
  • No concrete offer of Chinese assistance, but China lobbied U.S. for resolution ([27:58])

6. Ryanair & The European Jet Fuel Crisis

• Michael O’Leary Explains:

  • Ryanair is 80% hedged at $67/barrel through March 2027, protecting against spot prices near $150.

  • Other carriers less protected, risk of airline bankruptcies if high prices persist.

  • "We're 80% hedged out to March 27th at $67 a barrel. The spot price today is ... about $150 a barrel. So we're in great shape." —Michael O’Leary ([34:32])

  • "If oil prices remain up at these levels, if the Strait of Hormuz remains closed until say September, October, there’s going to be airline bankruptcies in Europe like you had Spirit over here in the States." —Michael O'Leary ([35:41])

• Cost Pressures & Environmental Taxes:

  • Pan-European taxes disproportionately hurt intra-European travelers while exempting long-haul flights.
  • O’Leary calls for abolition of these taxes, calling them "the dumbest taxation known in humankind." ([36:38])
  • Blunt critique of European Commission President Ursula von der Leyen (“Useless von der Leyen”).

7. Airline Competition: U.S. vs Europe

• Consolidation trend:

  • Europe likely to end up with four major carriers, mirroring U.S. industry structure.

  • Ryanair claims major cost advantage over competitors; expects to grow from 200 million to 300 million passengers/y.

  • "Europe is inexorably migrating towards four large carriers...Ryanair is going to be the kind of big dominant low cost carrier." —Michael O’Leary ([41:22])

  • "We'll pay down the last of our bond...I'm completely debt free now with a fleet of 650 aircraft. ... But there's lots of flaky, low fare but not so low cost carriers like the Spirits. There's a few of those in Europe." —Michael O’Leary ([40:47])

  • Distinction between lower cost structures in Europe (Ryanair’s ~$40/seat vs. Southwest ~$120/seat [39:47])

8. Notable Lighthearted Moments

• Banter on watches: Swatch x luxury collab (Royal Pop pocket watch) creates long lines ([13:11])
• Sports jokes: McIlroy, Irish pro golfers, and cultural asides ([43:14])
• Playful banter about European cities and rock bands ([43:07])

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Notable Quotes & Memorable Moments

• David Perdue on U.S. Policy Toward Taiwan:

  • “We don’t support independence, but we also don’t want to see coercion... We want a peaceful solution to the same. We want the same thing China wants. They want peace and stability.” ([21:05])

• Michael O’Leary on Competitive Advantage:

  • “We’re very well hedged... Our competitors are in real trouble.” ([34:32])
  • “I call her Useless. [Ursula] von der Leyen… She should start by abolishing environmental taxes on air travel. The Swedes now get it. … Europe needs to do likewise.” ([36:38])

• Banter on U.S. Policy:

  • “It’s called strategic ambiguity. So like, we’re trying to talk about something and it’s designed to be ambiguous.” —Joe Kernan ([19:50])

• Insight on Chinese Economic Headwinds:

  • “The one child policy and the demographic bubble. Plus unemployment among young workers, the college educated workers here is high.” —David Perdue ([26:31])

• On the Future of Airlines in Europe:

  • “If oil stays at $150 a barrel...we’re all going into recession. ... But what the hell do I know? I’m only some dumb schmuck working for an airline.” —Michael O’Leary ([38:36])

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Timestamps for Key Segments

| Time | Segment/Topic | |---------|-------------------------------------------------------------------------------| | 02:21 | Market update: yields, energy, Nvidia, consumer/retail earnings | | 06:29 | China to buy U.S. ag products; reviewing Trump-Xi deals | | 07:02 | Taiwan update, arms deal as bargaining chip—policy ambiguity discussion | | 16:25 | Interview with U.S. Ambassador to China David Perdue begins | | 18:26 | Perdue details outcome of U.S.-China summit, Boeing/agriculture deals | | 21:05 | Perdue on Trump’s message to Xi about Taiwan policy | | 26:31 | Chinese economic headwinds (demographics, real estate, youth unemployment) | | 27:58 | Strait of Hormuz—energy dependence and geopolitics | | 34:12 | Interview with Michael O’Leary (Ryanair CEO) begins | | 34:32 | Ryanair’s jet fuel hedging, competitive advantage | | 36:38 | O’Leary slams EU environmental taxes, policy critique | | 39:10 | Demand, booking pressures, front/back of the aircraft in bookings | | 41:22 | Airline competition, consolidation trends in Europe/U.S. | | 43:07 | Lighthearted Irish banter, golf, Fontaines DC, band trivia |

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Episode Tone & Takeaways

• Tone: Direct, informative, occasionally combative, with moments of humor and frankness—especially with O’Leary.
• Takeaways:
  • The U.S.-China relationship is cautiously stabilizing, with tactical trade wins but ongoing uncertainty around Taiwan—policy remains intentionally ambiguous.
  • China faces structural economic challenges, but no collapse is imminent.
  • European airlines are under pressure from jet fuel prices; Ryanair stands out for its hedging strategy and blunt assessment of policy failures.
  • Industry consolidation in airlines is trending on both continents; competitive advantage increasingly tied to operational efficiency and cost control.

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This episode captures a pivotal week for global markets, diplomacy, and travel—balanced between energetic debate, boots-on-the-ground diplomatic reporting, and candid industry analysis.

Transcript

[Andrew Ross Sorkin]

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[Podcast Sponsor/Announcer]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] Market Update podcast or find Schwab Market Update. Wherever you get your podcasts, bring in show music please.

[Andrew Ross Sorkin]

Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod back from China. Where are the deals? The White House touts a few trade agreements following President Trump's two day summit, but Taiwan and a potential arms deal there appear to remain undecided.

[Joe Kernan]

What is our policy?

[Producer/Technical Staff]

Would we a man in the room

[Andrew Ross Sorkin]

for the meetings with Xi Jinping, the US Ambassador to China, David Perdue joins us.

[David Perdue]

President Trump and President Xi have a strong relationship. The conversations were really quite consequential. They were cordial but candid.

[Andrew Ross Sorkin]

It's set up to be the summer of jet fuel fear. Will higher costs cancel Americans vacations or worse? Ryanair CEO Michael o' Leary on the

[Michael O'Leary]

global industry if oil prices remain up at these levels, if the Strait of Hormuz remains closed until say September, October going to be airline bankruptcies in Europe like you had spurred over here in the States.

[Andrew Ross Sorkin]

Plus all the rest of today's news that got us squawking from whale watching to swatch watches to AI in the markets.

[Joe Kernan]

Is it frothy? There's some FROTH.

[Andrew Ross Sorkin]

It's Monday, May 18, 2026. Squawk Pod begins right now.

[Producer/Technical Staff]

Stand under 5, 3, 2, 1, up and Andrew 2.

[Andrew Sorkin]

Good morning and welcome to Squawk Box right here on CNBC. We're live the NASDAQ market site in Times Square. I'm Andrew Ossorkin along with Joe Kernan on this Monday morning. Becky's off treasury yields the 10 years at 4.5, the two year sitting just at about 4. I should tell you the bond yields ended last week at their highest levels. I believe in quite some time. I think it was A full year energy, by the way, we should show you what's going on there. The sector just finished its best week since late 2024. WTI crude to 106. Brent at 110. I don't know if that's a best week. It's been their best week. Not if you own oil stocks. Bad for everybody else.

[Joe Kernan]

Yeah, we started getting a little bit, you know, we were nervous Friday. We probably, I don't know if we should be yet but you get, you know, you get that above four and a half on the four it got 465. I think you get 107 on the oil you get, you know, people saying all they're seeing is call options.

[Andrew Sorkin]

Right.

[Joe Kernan]

People aren't even hedging anymore. You got a new Fed chair. We're going to talk about that. So we lost one, we lost between one and one and a half and a half percentage points on Friday and we're down again today. Is it the beginning of a, of a drawdown? We talked about a Friday. I'm not willing to, you know, willing

[Andrew Sorkin]

to say it is. I mean I hope it isn't but

[Joe Kernan]

I don't if I'm nervous, I think that's probably good. Right. When we're nervous it's good. It probably could go right back up. Nvidia matters this week. But we did point out, you know, God, we were at pretty lofty levels. Back above 50,000 at one point. And the S and P and NASDAQ had a couple of huge days last week. Chips, intel, is it frothy? There's some froth. It's a big week though for tech investors. Earnings season well past its peak but we're closing in on an inside look at the AI economy. You know what that, what we're referring to and I mean look at that. On the right side of that chart there's Nvidia which is now 227 and we pointed out it was adding a couple of days. Last week it added a hundred billion of market cap, barely up. Small moves for Nvidia. And yet it's, you know, like adding an S&P 500 company every couple days. Industry bellwether Nvidia is going to report on Wednesday. Analysts are expecting the company to beat street forecasts. Well then raise your forecasts and then raise guidance. The stock nearing another all time high heading into the results. Commentary from CEO Jensen Huang will be parsed for signals about the overall health, the computing market and other stocks could see moves based on what Nvidia says retail earnings are also on deck, that they'll get a lot of those as the last main earnings season winds down. Then all the retailers are on that different fiscal year. So we'll get all of those. You can see most of the big names. Commentary on the state of the consumer will also be evident there from Home Depot, Target and Walmart. It's a relatively light week for economic data after we got those hideous CPI and PPI numbers last week. But we'll get some housing market signals April pending home sales, housing starts and building permits. We'll also get Fed minutes on Wednesday from the central bank's unusually divided decision where there were those three or four dissents. Some people want to go up, other people want to still go down. All that that we saw late last month. And Kevin Warsh people say that when there's a new Fed chief, he gets tested or he or she gets tested by the markets all the time. I don't know if that's true.

[Andrew Sorkin]

But not yet.

[Joe Kernan]

Not tested yet. But does it usually happen at the beginning of a new Fed chief's tenure? What happened?

[Andrew Sorkin]

What would it mean to be tested in this case?

[Joe Kernan]

You mean like inflation?

[Andrew Sorkin]

Things bubble over in a terrible inflation.

[Joe Kernan]

Maybe the market, maybe either the bond market or the stock market. Tessen he at this point doesn't want to end up like 2022, 2021.

[Andrew Sorkin]

That's true. China is going to be buying at least $17 billion worth of U S agricultural products in each of the next two years and billions more this year. That's according to a government fact sheet released released over the weekend. The White House saying the commitment was made last week during meetings in Beijing between President Trump and Chinese President Xi Jinping. U S and China are also planning to set up boards of trade and investment. And the White House also confirming China's president will visit the US this fall. And we're going to speak to David Perdue, the US Ambassador to China, later this hour.

[Joe Kernan]

And in the wake of President Trump's visit to China and questions about a U.S. arms deal with Taiwan, Taiwan's president is drawing attention to the island's key role in the world economy. In a Facebook post, he noted Taiwan's critical position in AI supply chains and it makes stability a shared priority for democratic nations. Last week, President Trump described a potential multibillion dollars weapon pack package for Taiwan as, in his words, a negotiating chip with China. And speaking over the weekend, U.S. trade Representative Jameson Greer addressed the U.S. relationship with Taiwan.

[Producer/Technical Staff]

The most important thing that needs to happen is we need to have no change in the status quo in the Taiwan Straits. And the president was really clear about this. There's no change in American policy on Taiwan. There's no change there. We expect that situation to be stable.

[Joe Kernan]

In his Facebook post, the Taiwanese president said Taiwan would not provoke or escalate conflict. And we've had Rubio and Jameson Greer both saying that, you know, the Strait has to stay the way it is, and we want stability and we want. And our policy is not changing. Strategic ambiguity. But it all sounds like no one would be thrilled if China decided to start whatever the steps would be to bring Taiwan back into the fold. And she seemed to say, you guys should be ready for that. The United States better be ready for that and not be a problem, or there was going to be a problem. So I don't know why that doesn't seem like things are. I don't know. I don't know when it happens. I think both sides ought to just cool it for a while and, you know, if you got some big party Congress coming in 2028, you know, chill. That's, you know, this is important for

[Andrew Sorkin]

AI that, that there is a question, though, because it. There's some people who looked at some of the comments that the president's made and said that President Trump, this is. That he's acquiescing or that he's effectively negotiating.

[Joe Kernan]

He just said, yeah, in a way, bargaining chip, right. This weapons deal to Taiwan, well, we'll see whether we go through with it.

[Andrew Sorkin]

Which then speaks and says to everybody that that's.

[Joe Kernan]

That's up in the air.

[Andrew Sorkin]

It doesn't say it's up in the air. It says the policy to give it away.

[Joe Kernan]

No, it says the policy's up in the air. Whether we stick with what we've been saying.

[Andrew Sorkin]

And you don't think, you don't read it as we're willing to let it go if China's willing to give us economic.

[Joe Kernan]

That's not what Rubio said. And when, you know, they were badgering Trump about it and he said, would you defend Taiwan? And he said, I'm the only one who knows the answer to that question. I don't think he would. I don't think he would want that on his watch.

[Andrew Sorkin]

No, but if you look at what I mean, by the way, the Taiwanese people, they saw that comment and they think that they're being sold. Sold away, too.

[Joe Kernan]

What do you mean? They're assuming Trump's not. I don't think they're assuming the United States is. Is out. We're involved in a huge weapon sale to Taiwan right now.

[Andrew Sorkin]

Right. But we're not. If China is willing to. Unless.

[Joe Kernan]

We're not.

[Andrew Sorkin]

If China's willing to give us a good deal.

[Joe Kernan]

On what.

[Andrew Sorkin]

That's what the bargaining chip is.

[Joe Kernan]

Right? A good deal where? On what?

[Andrew Sorkin]

Well, that's the question.

[Joe Kernan]

Trade or something. Yeah.

[Andrew Sorkin]

I mean, I think that's what everybody thinks it's about.

[Joe Kernan]

I don't think anyone knows right now. I don't think that Trump's even made up his mind on what he's in.

[Andrew Sorkin]

Okay.

[Joe Kernan]

Do you think it's a good idea for him to acquiesce or you want

[Producer/Technical Staff]

to

[Joe Kernan]

remember Biden, when they asked him, would you send troops to defend Taiwan? He said yes. Two days later, the entire White House was like, scrambling to do the damage

[Andrew Sorkin]

control on that, and now they're doing damage control on this.

[Joe Kernan]

Where's their damage control? On what?

[Andrew Sorkin]

On the negotiate. On the bargaining chip piece.

[Joe Kernan]

Oh, saying it's a bargaining chip.

[Andrew Sorkin]

Yes.

[Joe Kernan]

Saying the weapons is a bargaining chip.

[Andrew Sorkin]

Correct.

[Joe Kernan]

I don't know if I haven't. Who's doing damage control?

[Andrew Sorkin]

There was a whole skirmish over the weekend.

[Producer/Technical Staff]

So they're bargaining chips.

[Joe Kernan]

Comments walking back, whether we wouldn't. I don't know what. What is our policy? Would we.

[Andrew Sorkin]

That's.

[Joe Kernan]

But I don't think, anyway, there's a difference between selling weapons and actually getting involved in. In a hot conflict. Do you think that's where we're going

[Andrew Sorkin]

to talk to David Perdue about all this?

[Joe Kernan]

That's where the strategy. Yeah. That's where the strategic ambiguity.

[Michael O'Leary]

Maybe.

[Joe Kernan]

You think he's going to be doing damage control, too?

[Andrew Sorkin]

I don't know. Berkshire. Berkshire Hathaway's stock portfolio getting a new look during Greg Abel's first three months as CEO. Regulatory filing showing Berkshire took stakes in the following things. Delta Airlines and Macy's. During the first quarter, Berkshire added to its positions in Alphabet and the New York Times Company. And there were lots of position cuts during Abel's first three months on the job. That includes eliminating stakes in Amazon, United Health, Visa and Diageo. Now, Berkshire cut its stake in chevron by 35% and sold nearly all of its stake in Constellation Brands.

[Joe Kernan]

And while Berkshire was buying Alphabet, Stanley Druckenmiller was selling. New filings show that the Duquesne family office sold its entire stake in Alphabet during the first quarter. It had more than tripled that stake in the prior quarter. The firm also cut its Amazon stake by 99%. The money went into Broadcamp Broadcom. Duquesne built a new position worth more than $83 million in Broadcom during the quarter.

[Andrew Sorkin]

By the way, interestingly, I just seen, because I saw a little debate going on on X about this. Bill Ackman, I think, had been in Google and he got out of Google as well, Alphabet. So it's very interesting that people. And then they move out of Chevron at a time when oil has moved the opposite way.

[Joe Kernan]

When do they move up?

[Andrew Sorkin]

Well, that's the question.

[Producer/Technical Staff]

Yeah, I don't know.

[Joe Kernan]

Probably a good time to sell. Maybe now.

[Andrew Sorkin]

Could be. Swatch stores were forced to temporarily close in nine locations after giant crowds gathered looking for the new Royal Pop pocket watch. I kind of want one of these, by the way. This is so cool. The pocket watch is a collaboration between Swatch and a luxury brand. It retails for about $400, but sells on secondary markets for about $3,000. Patek, by the way, I believe, is the. Is the luxury collab. I mean, I think that's what's going on here. It's kind of an amazing, amazing thing.

[Joe Kernan]

Why do you want a pocket watch?

[Andrew Sorkin]

You don't. You want this watch? Go, Go Google this watch. It looks, it's. If you're into watches, it's a cool thing.

[Joe Kernan]

I'm looking at them.

[Andrew Sorkin]

Oh, I'm sorry. It's not, It's. I'm sorry. It's not. It's not Patek, but it's. It's pretty amazing what it is. And the lines are outrageous.

[Joe Kernan]

Anyway, people are jonesing for a Swatch.

[Andrew Sorkin]

This watch. Go online and take a look.

[Michael O'Leary]

Cheese will be next.

[Andrew Ross Sorkin]

Coming up on Squawk Pod, U.S. ambassador to China David Perdue, what he calls a highly productive meeting between President Trump and President Xi Jinping in Beijing, Iran, agriculture buys, and Taiwan.

[David Perdue]

He made it very clear to Xi Jinping in my presence that we're not changing the American policy on Taiwan. We fully support the Taiwan Relationships Act. The three communiques, the six assurances we don't support independence, but we also don't want to see coercion.

[Andrew Ross Sorkin]

We'll be right back.

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[Joe Kernan]

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[Producer/Technical Staff]

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[Andrew Ross Sorkin]

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[Michael O'Leary]

Huh.

[Joe Kernan]

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[Andrew Ross Sorkin]

You're listening to Squawk Pod Today with Andrew Ross Sorkin and Joe Kernan. Here's Joe.

[Joe Kernan]

U.S. and China planning to set up boards of trade and investment. This follows President Trump's meeting last week with Chinese President Xi Jinping. US Ambassador to China David Perdue called that gathering a crucial and historic effort to correct decades of what he calls economic imbalance. Ambassador Perdue joins us this morning. It's been a while. Senator, Ambassador, friend. David, how are you? It's good to see you, sir.

[David Perdue]

Joe.

[Joe Kernan]

Andrew.

[David Perdue]

I hope you guys are okay.

[Joe Kernan]

We're good. Hope you're, you're good as well. You talk about 25, 30 years of malaise and I guess you don't need to, to for us to describe what happened with, with what, how many industries were hollowed out from some of the stuff, some of the trade practices of China?

[David Perdue]

No, I spoke about it when I was in the U.S. senate. You and I have talked about it on air before. I mean, since 2004, basically, the Chinese have taken advantage of us from the standpoint of we open our markets, but then they, we've allowed them to hollow out our key strategic industries with price dumping and consolidation into state owned enterprises there. So now we're trying to rectify that. President Trump is desperately accelerating our ability to become independent again in these key strategic categories. But in that regard, I think this was a hugely successful trip. I think President Trump stood up for American workers and, you know, farmers and ranchers, businesses and, and he's really been over here selling and trying to get a level playing field.

[Joe Kernan]

You know, the media is going to media and no matter what, it's going to be looked at in probably in a half empty way. But it's hard to point to other than I guess the Boeing deal, I guess some, some engines and jet engines, things like that, that haven't been announced officially yet. We don't know what the concrete results are of the meeting with that from last week. What do you.

[David Perdue]

Let me, yeah, let me give you a few tactical things. I mean, these are the close end things. Obviously there's a great Boeing deal, 200 planes and about 400-450 GE engines will also be included in that. Then we open up beef. I mean, President Trump has been fighting for a year to open, beef up and they agreed in this meeting to recertify four facilities in the U.S. uSB facilities. They're going to open up poultry again. That's been, they've, we've had a moratorium on that for, for a long time. Then you know, there are other ag purchases, $17 billion of additional. This is in addition to the 25 million metric tons per year of beans, soybeans. So that from an AG point of view, it was a, it was highly successful. But also from a relationship standpoint, President Trump and President Xi have a strong relationship. The conversations were really quite consequential. They were cordial but candid. And I would say that, you know, they're developing a trust and more trusting relationship now. We have a lot of work to do, but President Xi Jinping committed to come to the US in September. September 24th is that date now. And then they talked about supporting each other for APEC 2026 and also the G20. So I would say this was a highly productive meeting. President Trump is out here fighting for Americans and trying to create a level playing field that we have not had for the last 20 years.

[Joe Kernan]

Yeah. I want to talk to you about what the conditions are like on the ground over there in terms of the economy and real estate and all the things that you get to see firsthand. But the whole Taiwan issue is, is, is just front and center. And when we talk about it, Mr. Ambassador, I. Our whole policy is called strategic ambiguity. So like we're trying to talk about something and it's designed to be ambiguous. No one knows anything. But, but we need some clarity on what happened because that was something that probably led all the coverage was what the comments of President Xi, which seemed a little bit bellicose. It almost seemed like he was tweaking the president about Taiwan. We don't know what the president's response was or whether there was one. He says, only I know that. And then his comments about using the weapon sales to Taiwan as a bargaining chip. It almost sounds like he's ready to give up Taiwan or change our policy to get some type of trade deal done. Do you know exactly what's happening?

[David Perdue]

I know exactly what's happening.

[Joe Kernan]

You do?

[David Perdue]

President Trump made it very clear. He made it very clear. Now, you know, the gag on the back of the plane, the questions asked there were different, but he made it very clear to Xi Jinping in my presence that we're not changing the American policy on Taiwan. We fully support the Taiwan Relationships act, the three communiques, the six assurances. We don't support independence, but we also don't want to see coercion across the strait. We want a peaceful solution to the same. We want the same thing China wants. They want peace and stability. This is a hot topic for the Chinese. President Trump held the line with regard to arms sales. What President Trump commented there, you said was that, you know, it's for him to know. Well, he's already sold 50% more military equipment to Taiwan in his first administration, in this one, than any other president since 1979. So President Trump committed to the U.S. policy that we've had for the last 40 years, 45 years or so.

[Joe Kernan]

Dave, did you say we do. We do not support the independence of Taiwan? Is that Taiwan Relations act and third

[David Perdue]

communique says is that US does not support independence.

[Joe Kernan]

So that's already been the strategic ambiguity. We don't support independence, but we don't want China to militarily or through coercion to change that independence. See why it's so ambiguous?

[David Perdue]

Well, I don't see that as ambiguous. I know for decades they've called it strategic ambiguity. But to me, it's very clear. We're not choosing sides. We want the people of Taiwan and the people of China to decide the future. And so we just don't want it to be coercive, and we don't want it to end with a kinetic action. And I think President Trump this week made it very clear that his policy or the United States policy had not changed, and he accentuated the clarity around that. Now, he also heard President Xi out, and this I thought was very constructive. He allowed presidency to talk to him at length about how they see the issue. And I think that was very constructive because President Trump again established our position and our past practice with regard to Taiwan and arm sales for that matter,

[Joe Kernan]

then it's never been the United States's policy to defend Taiwan militarily, like Joe Biden said, and like, I don't know what that was in some type of brain fight or go ahead.

[David Perdue]

He made that statement three times on some trip over here. But no, it's never been our policy to defend Taiwan. That's not what the Taiwan Relations act says. That's not what any of the communiques say. And it reserves the right that we will try to help maintain peace and stability. On that issue.

[Andrew Sorkin]

Ambassador, though, I think the question becomes, if in fact there is quote, unquote coercion, and the question is, is the coercion kinetic or something else, what role do you think the United States plays in that context?

[David Perdue]

Well, we don't have a peace treaty. And so the Taiwan Relations act is the one that establishes a one China policy, not a principle. But that, that is to be determined by the President and the Congress at that time. I mean, I think at this point, our desires have been made very clear and consistent over the last five decades.

[Andrew Sorkin]

Do you think that as we try to gain some kind of what might describe as chip independence, this is now the United States independence from Taiwan to some degree that it makes Taiwan less strategically important over time, if in fact that can be accomplished, meaning that we move more chip manufacturing to the U.S. some people, by the way, say that's not even possible in terms of that kind of independence, truly for something like five to 10 years at the pace that we're going.

[David Perdue]

Well, we have some challenges. We have rare earth element independence and magnet independence. I mean, you know, we've allowed these key strategic industries to put us in a single source dependency. That's not comfortable with anybody. I just met with all the diplomatic staff here in, in Beijing from all of our allies around the world, and this is a number one topic with them. And so I believe that what President Trump has done is establish a priority to reestablish our independence. And this is something the Chinese are really struggling with. They've actually issued some edicts recently and some more constraints on our trade and so forth. We're not getting magnets the way we should have based on the Busan agreement. President Trump brought that up and President Xi Jinping agreed that we would address that with regard to the defense of Taiwan. That that is a something that the American people, through their elected officials and the administration at the time will have to make a decision. At the time, what we're trying to do is encourage China to find a peaceful solution to this issue around Taiwan.

[Joe Kernan]

Tell me about that question I asked earlier. In terms of bargaining, that's another thing that went back and forth. Oh, Xi's got the upper hand. Oh, no, President Trump has the upper hand. They still export a lot and that's good and bad for China. They want to be consumer driven. And you know, the trade deficit with the US Is way down because of still large. But no one would ever say 200 billion was small. But much less, Senator, are they feeling the pinch from some of the policies that President Trump has put on there. I know real estate isn't great.

[David Perdue]

There's no question that over the last decade they've developed some headwinds. I mean, how smart was this, the, the one child policy? And that demographic catastrophe is beginning to hit home here now, if you look at what, what we've done on trade, I mean, our trade depth is down 30% over the last year. So I believe the real estate debacle that they have here has not been rationalized the way ours was in 2008, 9 and 10. That is something that's hovering over them now. The one child policy and the demographic bubble. But plus unemployment among young workers, the college educated workers here is high. So, yeah, they have headwinds. But I think right now there's no debate about who won this summit. It wasn't a contest. What we're trying to do is find a way to develop a future where China and the US can live productively together and have watch both of us prosper. That's what Xi Jinping said in his opening remarks was they don't believe, he doesn't believe in the Thucydides trap. He thinks that there's a way forward for both prosper and grow.

[Joe Kernan]

Did the, in terms of the strait, that seemed good. It seemed, you know, China agreeing that we don't want Iran to ever have a nuclear weapon and the strait needs to be open, but there's no concrete offer of assistance. And they could, couldn't they? And don't they need that strait to be open? How long can they go? Where are they getting their oil now? They got a lot of stockpiles, I guess.

[David Perdue]

Well, they get 48% of their oil through the Strait, 15% from Iran and 33% from the Gulf states. So, yeah, they have high incentive to see this straightened out. And they, they lobbied us for that. In these meetings, President Trump encouraged them to get involved. He said, we don't need your help. Militarily but we need Iran to negotiate in good faith. Look, we've got agreement there. China and the US agree that, that there should be no nuclear weapon in the hands of the Iranians. And the second thing is no tolls in the strait and that the strait should be open. But you know, I think at this point it's all about the negotiations. And President Trump said very clearly he's to go to the next step. He doesn't want to do that, but he's prepared to do that if the Iranians don't come back to the table and deal straight up on this issue.

[Joe Kernan]

All right, last question. They don't have elections, but he does need a, President Xi does need to have support obviously of the ccp and there's, I don't know, a lot of, we have the 250 if they've got some things coming up as well. Does he, President Xi, in your view, have the same concerns about doing what, what is best for, for his people or is it all about maintaining power for, for the ccp? And, and that, that, in other words, President Trump has to care about midterms. President Xi, you know, if the GDP, personal GDP of China is still $13,000 versus 90,000 here, that's not, you know, he doesn't necessarily have to answer to those types of concerns, does he?

[David Perdue]

No. And I think therein lies a difference in how America treats our long term strategy versus China. I mean, they have 2049, their 100 year anniversary clearly in sight. It's only 25 years from now. And so President Trump is here for two and a half more years. He's in a hurry to get some things done. I believe Xi Jinping though, has made the calculus that he can deal with President Trump. He does not know who's going to come after that. And there are some things that need to be dealt with on trade and Taiwan, the Middle east, all the Russia, energy. I mean, we think we have a huge opportunity to sell them LNG right now. And I think there's a door that's beginning to open in that regard. So I think the accountability issue is one that we just don't know in China long term. This person Xi Jinping is in charge, he's in control. You know, Communist party only has 6% of the population of China are members, but they certainly have control over the other 94. And look, right now they're not. This, this economy is not going to collapse, Joe, but it is certainly going to muddle through. Not unlike maybe what we did after our 089 issue. So he is clearly in charge here. But I think this meeting went a long way to having President Trump and President Xi understand each other more clearly on some of these sticky, sticky issues.

[Joe Kernan]

6%, not a big number unless you multiply it by 1.4 billion and it becomes then it becomes a pretty big number. Anyway, Ambassador Purdue, great, great to see you. Best to Mrs. Perdue and hope to see you again soon.

[Andrew Ross Sorkin]

Still to come on squawk pod the jet fuel crunch in Europe with the continent's largest low cost air carrier, Ryan Air CEO Michael o' Leary never holds back.

[Michael O'Leary]

The risk in Europe though was they were worried in the last couple of months there'd be supply disruptions, so they get some of their oil from the Middle East. Most of that has switched to supplies coming from the Americas, Norway, West Africa. So the risk of fuel disruption has gone away. But much higher oil prices are going to be a real challenge through the remainder of this summer. In Europe,

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[Joe Kernan]

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[Andrew Ross Sorkin]

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[Andrew Ross Sorkin]

Welcome back.

[Producer/Technical Staff]

This is Squawk Pod up and Andrew Q.

[Andrew Sorkin]

You're watching Squawk Box on cnbc. I'm Andrew Oz Sorkin along with Joe Kern.

[Joe Kernan]

Europe's largest airline group, Ryanair earnings out this morning. Join us now to talk the company's results, fuel costs, Boeing and more as Ryanair Group CEO Michael o'. Leary. The Dublin based budget airline group is Boeing's biggest customer outside of the U.S. good morning.

[Michael O'Leary]

Good morning, Joe. I don't, I don't feel qualified to fill Becky's seat here, but I'll do my best.

[Joe Kernan]

Just do your best.

[Michael O'Leary]

Considerably older and a lot less attractive.

[Joe Kernan]

Certainly not as well. Actually, we can't say things like that anymore. You look great. You look great. I find you very attractive. How bad is, is this in, likely to get in terms of, of jet fuel?

[Michael O'Leary]

I don't think it's bad at all. I mean, yeah, we've just announced record full year results. So we carry 208 million pastures. We were declared a profit, 2.26 billion. Oil prices have spiked hugely, but we're very well hedged. We're 80% hedged out to March 27th at $67 a barrel. The spot price today is on jet is about $150 a barrel. So we're in great shape.

[Joe Kernan]

Let's have a good CEO. Whose idea was that? The CEO or the cfo probably. You've been hedging all along?

[Michael O'Leary]

Yeah, we've hedge all along. Generally speaking, it's the advantage of having a strong balance sheet. So we're in pretty good shape. Our competitors are in real trouble. Most of them only hedged till the end of September. The risk in Europe, though is they were worried in the last couple of months there'd be supply disruptions. So they get some of their oil from the Middle East. Most of that has switched to supplies coming from the Americas, Norway, West Africa. So the risk of fuel disruption has gone away. But much higher oil prices are going to be a real challenge through the remainder of this summer in Europe. But thankfully Ryanair, because of our hedging, we should be in pretty good shape.

[Andrew Sorkin]

Is your sense that the other airlines that you, you worry about could get in trouble, that they do want, do they either go bankrupt or are you worried that they just start canceling flights left and right because it's too expensive to Even be in the air or what?

[Michael O'Leary]

Andrew, whether already canceling flights, we've seen a lot of competitors take 5,6% of capacity out in April, May and June. I mean I think if oil prices remain up at these levels, if the Strait of Hormuz remains closed until say Sept. October, there's going to be airline bankruptcies in Europe. Like you had spirit over here in the States. We have airlines over there that are in the same kind of poor shape. They have low fares but high costs and therefore can't make money. I mean, I don't think anybody really believes this is going to continue on to the end of the summer. You have Memorial Day coming up here at the end of May. The midterms are kicking off. I think the administration is going to have to declare a win and get the hell out of there.

[Joe Kernan]

Policy mistakes just across the European Union with energy. I mentioned that to you. Is it glaring to you at this point? Is it Germany?

[Michael O'Leary]

No, it's pan European, Joe. I mean we have spent the last 20 years taxing the hell out of European air travel. We have an environmental tax about €7 a ticket now on only on intra

[Producer/Technical Staff]

European flights for carbon dioxide.

[Michael O'Leary]

Oh yeah, saving the planet and the hedgehogs and whatever else it was. But we exempt all the long haul flights. So the Americans, the Chinese, the Gulf carriers are all exempt. We're just taxing the hell out of the poor dumb Europeans going on their two weeks holidays to Spain, Portugal, Italy and Greece. The airlines across Europe are calling for abolition of that ets. It is the dumbest taxation known in humankind. Ursa von der Leyen, who's the. I call her Useless. She's the president of the European Commission. Useless von der Leyen. She's been talking about making Europe more competitive for about the last two years because she hasn't had an idea, no initiative. She should start by abolishing environmental taxes on air travel. The Swedes now get it. The whole Magretta Thunberg flight shaming. They've abolished their aviation tax and we're growing very strongly in Sweden. Europe needs to do likewise.

[Joe Kernan]

Do Europeans ever look at Germany and wonder about the leadership there with, with what's, what's happening with.

[Michael O'Leary]

I don't think much is the leadership. I mean, it's just.

[Joe Kernan]

Should they be helping with Iran or with the Strait?

[Producer/Technical Staff]

Yahoo.

[Michael O'Leary]

Now, political issues. You know, look, we all want an early solution to the Strait. You know, it would have helped I think if the administration here had consulted more with the Europeans before they went in.

[Joe Kernan]

Right.

[Michael O'Leary]

You know but it is in everybody's interest to get the straits for moves reopened. Europe's jet fuel doesn't come from the Middle east. So we're if in that sense. But high oil prices is not in the US is not in the good for the US Economy, it's not good for the European economy. We need to get this thing fixed. I mean, I disagree with Trump on tariffs, I fundamentally disagree with Trump on a few things. But one of the things he's right on is Europe has been weak on defense spending. NATO needs to significantly up its game on defense spending. The only way Europe can fund that is by getting to a much more competitive economy and taxing things like over low fare. Air travel is not the way you

[Joe Kernan]

get to a competitive.

[Michael O'Leary]

You're just taxing ourselves.

[Joe Kernan]

So you're hedged, but the country of Europe is not hedged on. Could there be some recessions in some of the countries that are less.

[Michael O'Leary]

Again, as you know, it depends on how long this goes on. I mean if oil stays at $150 a barrel, you know, for true to September through to the end of this calendar year, we're all going into recession. The U.S. europe, everybody. I would be more optimistic. I think it will, you know, there will be an end brought to the other straits we reopen. Oil prices will trend back downwards again I think by the time we get to the end of the summer. But what the hell do I know? I'm only some dumb schmuck working for an airline.

[Joe Kernan]

You didn't see any result, any, any pressure yet from, from demand destruction from this or.

[Michael O'Leary]

Well, funny enough, because we're coming into the peak travel season in Europe though. You'll see. We're seeing there's a little bit of nervousness out there into June, July and August. We're having to price a little bit down to keep bookings going. But close in is very strong.

[Andrew Sorkin]

Do you see a distinction? So one of the things that's fascinating to watch in the US is that these US airlines are killing it in the front of the plane.

[Joe Kernan]

Yep.

[Andrew Sorkin]

Killing back of the plane is more complicated story. Is that the same story in Europe or is that a completely different story?

[Michael O'Leary]

I mean it is a similar story. I mean one of the things, one of the fundamental difference between Europe and the US is we have much lower

[Andrew Sorkin]

cost carriers across the board. Across the board.

[Michael O'Leary]

Like we wipe the floor with Southwest over here. I mean our cost per seat is about $40. Southwest cost per seat is about $120.

[Andrew Sorkin]

So we're much lower cost is That a labor story? What is that?

[Michael O'Leary]

It's an efficiency, bigger aircraft gauge type. We just generally we don't distribute to travel agents. We're just much more ruthless about being lower cost. But there is a similar story with the legacy carriers in Europe because the Gulf guys are all grounded. The legacy guys are taking all the connecting traffic going to Asia, going to the U.S. i mean, the Gulf carriers are in real truck minutes. Essentially they're grounded. The Lufthansas, the bas, the Air France's are taking all that big long haul connecting and that is pricing up. So they're doing very well on the long haul stuff. But on the short haul piece, Ryanair is wiping the floor with everybody because we have such a cost advantage. We're so well hedged. We will pay down the last of our bond. I have a 1.2 billion bond. We pay down next week. I'm completely debt free now with a fee to 650 aircraft. So we're still growing very strongly in Europe, but there's lots of flaky, low fare but not so low cost carriers like the Spirits. There's a few of those in Europe.

[Andrew Sorkin]

But can you say to this, and it's really because we have a US audience that's going to understand this, do you think that in Europe there's so much more competition than there is in the U.S. do you believe? I mean, we were just having a big debate a couple years ago whether Spirit, before it went bankrupt, should have been, should have been acquired by JetBlue. Wasn't allowed to happen. But there's all sorts of debates even today about whether American, for example, should merge with United. I don't think that's in the, in the offing. But how do you see competition from your vantage point in Europe where there seems to be a lot of it

[Producer/Technical Staff]

compared to here, there's not that much

[Michael O'Leary]

anymore in Europe, Andrew. I mean Europe is inexorably migrating towards four large carriers. You have over here, United, Delta, American, American and then you have Southwest, the big low cost carrier. Europe is, is going the same way. So you'll have the three big legacy carriers, the BA family, the Air France, KLM and Lufthansa. And then Ryanair is going to be the kind of big dominant low cost carrier. And the other guys who are stuck in the Middle east, jets, the Wizards, the Baltic Airs are either going to get taken or which I think will, there'll be M and A or they'll fail.

[Andrew Sorkin]

Okay?

[Michael O'Leary]

And that's inevitable. So Europe, it runs about 10 years behind the US. The US had the first. The kind of the. The. But were the first to deregulate one of the few economic policies that Carter was successful with. But first Europe copied that. US Success. But we're coming to the end of that now. And therefore we're going to fundamentally be the only low cost carrier in Europe. But the good news is we've ordered 300 aircraft for Boeing, the Max 10s, which we hope to take first delivery of in the spring of 27. That gives us growth to go from 200 million to 300 million passengers a year over the next eight years by keeping airfares low in Europe. And the great advantage in Europe is the rest of them are dumb and high fare. So all we got to be is not so dumb and much lower price and we'll win.

[Andrew Sorkin]

Wow. Thank you, Michael.

[Michael O'Leary]

While Rory McElroy wins the British Open.

[Joe Kernan]

Yeah. You thought Rory. He couldn't find it.

[Michael O'Leary]

Couldn't find the PGA.

[Joe Kernan]

That galls you, doesn't it?

[Michael O'Leary]

I think Harrington or McElroy were going to nick it again.

[Joe Kernan]

Harrington. And he can play on the Senior Tour. Can he?

[Michael O'Leary]

He is on the Senior Tour.

[Joe Kernan]

That's what I mean. And he was one under. I saw him chip in an Eagle.

[Michael O'Leary]

And another, he's one of those rare Irish guys, you know, wasn't an alcoholic. He's kept himself fit.

[Producer/Technical Staff]

He's kept himself kind of rare.

[Michael O'Leary]

Yeah.

[Joe Kernan]

Yeah.

[Michael O'Leary]

You a self fit in action.

[Joe Kernan]

You're Fontaine's D.C. fan? We do.

[Michael O'Leary]

Hey, you're very good on the old Rothbands.

[Joe Kernan]

You know what DC stands for?

[Michael O'Leary]

A District of Columbia, I presume?

[Joe Kernan]

Dublin City.

[Michael O'Leary]

No way.

[Joe Kernan]

Yes. What?

[David Perdue]

Yes.

[Michael O'Leary]

I thought it was some kind of YouTube. We're gonna conquer your America.

[Joe Kernan]

Fontaine's is named after the Godfather character. Fontaine.

[Michael O'Leary]

There should be Fontaine's. District of Columbia.

[Joe Kernan]

No. Oh, my God. Okay.

[Michael O'Leary]

You two are making a new album. They're on the way back.

[Andrew Ross Sorkin]

And that is Squawk Pod for today. Thanks for listening. Thanks for starting your week with us here. Squawk Bucks is hosted by Joe Kernan, Becky Corner Quick and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern to get the smartest takes and analysis from our TV show right into your ears. Please follow Squawk Pod wherever you get your podcasts. Have a great Monday. We'll meet you right back here tomorrow.

[Producer/Technical Staff]

We are clear.

[Andrew Sorkin]

Thanks, guys.

[Podcast Sponsor/Announcer]

Building a portfolio with Fidelity Basket Portfolios is kind of like making a sandwich. It's as simple as picking your stocks and ETFs. Sort of like your meats and other topics and managing it as one big, juicy investment. Now that's pretty good. Learn [e-mail] baskets Investing involves risks, including risk of loss. Fidelity Brokerage Services, LLC Member NYSE SIPC.