Podcast Summary: Statecraft “One Year of Trump’s Economic Statecraft”

Host: Santi Ruiz
Guests: Dalip Singh (Former Deputy NSA for International Economics), Peter Harrell (Former Senior Director, International Economics, White House), Arnab Datta (Institute for Progress, Employ America)
Date: January 27, 2026

Episode Overview

This episode assesses the first year of President Trump’s second term through the lens of economic statecraft. Host Santi Ruiz brings together three leading policy thinkers to dissect the tools and strategies the Trump administration is deploying—tariffs, sanctions, industrial policy, Venezuela policy, China relations, and new moves such as federal equity stakes. Originally intended as a high-level, 30,000-foot review, the episode pivots to examine specific, headline-dominating events, particularly the dramatic seizure of Venezuelan oil and evolving strategies in the economic contest with China.

1. Defining Economic Statecraft (02:33–04:41)

Key Points

• Dalip Singh defines economic statecraft as:
  “The use of economic tools, both punitive tools and positive tools, to achieve a geopolitical objective. … Most people are familiar with the punitive tools: sanctions, tariffs, export controls, investment restrictions. … The positive tools… are more potent because they derive their strength from who we are as a country: our power to inspire, attract, and create.” (02:33)
  • Positive tools include investment subsidies, infrastructure financing, price floors, and offtake agreements.
  • Dalip stresses current U.S. policy is imbalanced—overusing punitive tools and under-deploying positive ones.

Notable Quote

• “We’re out of balance in terms of the amount and frequency and potency of punitive tools relative to positive tools.”
  — Dalip Singh (03:35)

2. The Shift: From Sparing Use to “Default” Economic Pressure (04:00–06:15)

Key Points

• The U.S. and other major powers have made economic pressure a default foreign policy tool, especially post–late 20th century.
• Singh traces this shift to the end of the Cold War’s “unipolar moment,” the resurgence of great-power competition, and the avoidance of direct military conflict due to nuclear deterrence:
  • “Because today’s great powers are mostly nuclear powers, ... conflict [is] channeled … into the arena of economics—economics, technology, and energy, because confrontation in those domains is not existential.” (04:41)
• The Venezuela intervention is an unprecedented extension: removal and arrest of a head of state, asset seizure, and direct U.S. administration of oil revenue.

3. Case Study: Venezuela—Seizure, Oil, and Precedents (07:25–12:10)

Venezuela: What Happened?

• Peter Harrell: Trump administration moved from ineffective sanctions to militarized seizure of Venezuelan oil, culminating in Maduro’s removal and U.S. management of Venezuelan oil exports.
• The U.S. now controls Venezuelan oil revenue in U.S. accounts, effectively picking how proceeds are spent (e.g. U.S. agriculture, medicine).

Notable Quotes

• “What is striking to me ... is a little bit less—well, obviously going in and seizing a leader is totally in modern history, unprecedented. ... There seems to be much less pretense about sort of normative goals other than, you know, controlling the resources down there. And that really is strikingly different.”
  — Peter Harrell (10:53)
• The arrangement echoes—but is less internationally monitored than—the U.S. management of Iraqi oil post-2003.

4. Energy Markets, Oil Policy, and American Security (12:10–20:20)

Market Impact and Security

• Arnab Datta: Trump’s singular focus is getting more oil on the market to reduce prices, but this could undermine U.S. energy security by depressing prices and risking the viability of domestic shale producers.
• U.S. approaches risk long-term vulnerability if OPEC or unstable governments curtail production and U.S. shale is weakened.

The Reality of Venezuelan Oil

• Venezuelan oil fields are distressed and require “at least $100 billion” in capital to restore production—returns would take years.
• American companies are reluctant to invest without guaranteed political stability.

Notable Moments

• “These oil assets ... are more like distressed assets.”
  — Dalip Singh (15:55)
• “The idea that we would subsidize—U.S. taxpayers would subsidize—that production rather than efforts to boost our domestic sector is, I think, pretty absurd.”
  — Arnab Datta (18:59)
• Government is pressuring oil majors to fund occupation/reconstruction, functioning as a “financing arm of the U.S. military”—a tough sell to corporate boards.

5. China: Resource Denial, Oil, and Strategic Competition (21:07–24:37)

Strategic Aims and Chinese Preparedness

• Administration’s moves can partially be read as an attempt to restrict Chinese energy access, but also influenced by migration and drug flow concerns.
• China has been stockpiling oil and building resilience against oil market shocks—suggesting U.S. efforts may have limited leverage.

Notable Points

• China is a major Venezuelan creditor; U.S. seizure of Venezuelan assets is, in effect, a “de facto default.”
• The benefits of lower energy prices globally actually aid China in the short run; attempts at long-term leverage may be overestimated.

Memorable Quote

• “In the short run, it’s actually quite good for China to see more production coming onto the market.”
  — Peter Harrell (24:05)

6. Tariffs, Export Controls, and the Trump Approach to China (25:37–37:13)

Evolving Policy Intent

• Early second-term Trump used aggressive tariffs (up to 145% on China at one point) and strict export controls, but has since moderated for a managed trading relationship or “detente.”
• Administration recently permitted high-end Nvidia chip sales to China, representing a shift from “small yard, high fence” (Biden-era) to monetizing U.S. technological leadership.

Evaluating Tariffs’ Impact

• Despite the aggressive stance, China’s exports have increased—diverted to other markets (Europe, ASEAN, Global South).
• Tariffs and controls are hurting China but are not “working” if the aim is to cripple China’s strategic sectors, as China adapts and maintains dominance.

Notable Quotes

• “I don’t have a clear idea of the strategy vis a vis China. I could give you a flippant answer and say we’re talking about one man’s reaction function …”
  — Dalip Singh (27:46)
• “Growth has held up close to 5%. … China is now literally exporting their way out of a real estate morass.”
  — Dalip Singh (28:20)

7. Inflation, Tariffs, and Economic Effects at Home (38:52–48:51)

Effects on U.S. Inflation, Manufacturing, and Consumers

• Trump has partially backed off maximum tariffs; current tariffs impact only about half of U.S. imports, after initial blanket increases.
• Price effects are most acute in low-margin goods (e.g., furniture, apparel); companies sometimes delay price increases, but pass-through is significant.
• Singh: Effective tariff rate jumped from ~2.5% (Jan 2025) to 28% (April), now down to ~18%—highest since 1934.

Notable Quotes

• “We have not seen a domestic manufacturing renaissance in the U.S. that substitutes for foreign imports—manufacturing output has been flat or contracted for 10 consecutive months … 80% of those [tariff] costs … have been passed on to consumers. … That translates into about a 6 to 8% decline in their inflation adjusted after tax income for the bottom 20%.”
  — Dalip Singh (42:25)
• Businesses built large inventories in anticipation of tariffs, muting short-term inflation increases; long-term effects may still materialize.

8. Country-by-Country Deals and the Limits of the Tariff Model (55:53–62:14)

Strategy of Securing Country Deals

• U.S. focus: Secure agreements with top trading partners (Japan, Korea, EU) as a way to stabilize tariff policy and gain strategic concessions.
• Most advanced deals are with Malaysia and Cambodia; “MOUs” with Japan and EU provide tariff certainty, but significant friction remains.
• Canada and Mexico have partial exemptions under USMCA, but new deals remain on the horizon.

Decoupling and Long-Term Risks

• Allies are beginning to seriously explore decoupling; Canadian political leaders openly discussing diversifying oil exports to China given uncertainty under U.S. policy.

9. Domestic Industrial Policy, Equity Stakes & the MP Materials Deal (62:14–80:46)

Shift to Active Industrial Policy Tools

• All panelists support expanded use of positive economic tools—equity stakes, concessional loans, price guarantees, and offtake agreements—especially to correct market failures in strategic sectors.

The MP Materials Deal (64:19–67:49)

• Arnab Datta walks through the rare earths story: U.S. dependence on China, repeated bankruptcies, and new Defense Department intervention: multi-billion dollar stake, price floor, offtake guarantees to create a vertically integrated “national champion.”
• Trump team has now taken equity or equity-like stakes in at least 15 companies (MP Materials, Intel, Lithium Americas, major nuclear energy ventures).

Risks and Opportunities of Equity-Based Industrial Policy (70:23–80:46)

• Risks: Cross-policy conflicts of interest, entrenching “national champion” monopolies, suppressing future innovation.
• The ideal strategy is to promote markets outside China by building market infrastructure (transparent pricing, risk intermediation), not just picking winners.
• When to use equity: for “upfront capital investments with long payoff cycles and high risk” in critical sectors, where there are clear market failures.
• All agree: industrial policy interventions should be temporary bridges to self-sufficiency, with clear milestones and sunset triggers.

10. Lessons Learned & Prescriptions for the Next President (81:48–91:42)

Business and Policy Certainty

• Arnab Datta: Root interventions in institutions with credibility and stability, aiming for nonpartisan, technocratic oversight to build private sector confidence.
• Peter Harrell: Integrate all available tools for effective results; tariffs alone aren’t enough. Be more legally and statutorily creative/aggressive, but push Congress to codify and oversee the toolkit.
• Dalip Singh: Develop a doctrine with clear limiting principles for punitive tools; institutionalize industrial policy with playbooks and strategic investment funds; create a Department of Economic Security for coherent strategy.
  • “The frequency, the potency of economic weaponry ... is growing almost exponentially. ... We need guiding principles to govern at the highest levels of the US why, when, to what extent, and for what purpose we’re using these punitive tools.” (89:01)

Timestamps of Key Segments

• 00:00–02:33: Episode introduction and defining the conversation
• 02:33–06:15: What is economic statecraft? (Singh answers)
• 07:25–12:10: Venezuela policy: seizure and administration of oil
• 12:44–20:20: U.S. oil strategy, market consequences, and energy security
• 21:07–24:37: U.S. moves against China (resource denial, oil markets, China’s buffer)
• 25:37–37:13: The Trump approach to tariffs, export controls, and Chinese adaptation
• 38:52–48:51: Tariffs’ effects on U.S. inflation, jobs, and economic structure
• 55:53–62:14: Country deals, risk of decoupling, and ally perspectives
• 62:14–80:46: Industrial policy toolkit, equity stakes, and the MP Materials deal
• 81:48–91:42: Advice for the next administration and playbook for the future

Notable Quotes

• “The question is, does the private sector by itself have the incentives to invest at pace and scale to compete? I think the answer is no, and therefore I am very much a proponent of the US Government taking more risk to achieve strategic objectives.”
  — Dalip Singh (62:52)

• “It is worth mentioning ... if you create an incentive by the federal government holding an equity stake, ... does it create cross policy pressure … to maintain the value of that equity stake even if a competitor arises? … That is a real thing.”
  — Arnab Datta (70:55)

• “We need a doctrine that lays down limiting principles for the use of punitive economic tools.”
  — Dalip Singh (89:01)

Tone and Takeaways

Throughout the episode, all three panelists approached the conversation in a pragmatic, policy-wonk tone—critical but constructive, skeptical of “maximalist” punitive approaches, and enthusiastically engaged by the scope for creative, positive U.S. statecraft. The consensus is that industrial policy, if institutionalized and calibrated, is here to stay. But the “improvisational” approach of recent years—too often negotiating one-off deals in crisis mode—needs to give way to strategy, transparency, and consistency. Tariffs alone are not a panacea, and their long-simmering downstream effects may be only beginning to show.

For more, including the full annotated transcript, visit www.statecraft.pub.