WSJ Tech News Briefing: Trump’s Trade War With China Highlights Tech Vulnerabilities on Both Sides

Release Date: May 7, 2025
Host: Victoria Craig, The Wall Street Journal

Introduction

In the May 7th episode of WSJ Tech News Briefing, host Victoria Craig delves into the intricate web of technological dependencies between the United States and China, the world's two largest economies. The discussion centers around how recent trade tensions, particularly under the Trump administration, have unveiled significant vulnerabilities in both nations' tech industries. The episode features insights from WSJ tech columnist Christopher Mims and Yoko Kubota, the Wall Street Journal's Deputy Beijing Bureau Chief.

1. Reducing U.S. Dependence on Chinese Rare Earth Metals

Timestamp: [00:00 – 05:41]

The episode opens with a focus on a Silicon Valley startup, Conifer, which is pioneering the development of electric motors that do not rely on rare earth metals—a critical component traditionally sourced from China. Rare earth metals are pivotal in manufacturing various high-tech products, including electric vehicles (EVs), smartphones, and military equipment.

Christopher Mims, WSJ tech columnist, explains:

“They have found a cheap way to make a rare earth free motor. Their first application is going to be like Vespa style scooters. Turns out that's a huge market. There's a billion of those in the world.”
[02:12]

Conifer's innovative approach utilizes iron-based magnets, specifically oxidized iron, which significantly reduces dependency on rare earth elements. Mims highlights the potential scalability of this technology beyond scooters, extending to household appliances, HVAC systems, and full-scale electric vehicles.

Victoria Craig probes the practicality and timeline for widespread adoption:

“Within four years you could have rare earths free motors of the kind made by Conifer and electric vehicles.”
[04:30]

Mims acknowledges the challenges, such as the slightly lower power output of these motors and the need for their integration directly into vehicle wheels. Despite these hurdles, he remains optimistic about the long-term vision of achieving a fully North American-made electric vehicle industry, contingent on substantial support and infrastructure development.

2. U.S.-China Technological Interdependence

Timestamp: [05:41 – 07:23]

Victoria shifts the conversation to the broader context of the U.S.-China trade war, emphasizing President Trump's strategy to reduce manufacturing reliance on China by imposing tariffs and encouraging domestic production. The discussion underscores how U.S. tech giants are heavily dependent on Chinese manufacturing for critical components, including smartphones, laptops, and memory chips.

3. China's Dependence on U.S. Semiconductors for Automotive Industries

Timestamp: [07:23 – 12:00]

Yoko Kubota provides an in-depth analysis of China's reliance on American semiconductors, particularly in the automotive sector. She notes that despite China's efforts to achieve self-sufficiency, the demand for American-made chips remains robust.

“China is still reliant on foreign chips, and that includes some American made chips. So last year China's imports of semiconductors hit $412 billion and that was still up 10% from 2023.”
[07:23]

Kubota differentiates between the types of chips used in consumer electronics versus those in automobiles. While advanced, smaller chips are critical for smartphones and AI applications, the automotive industry primarily utilizes microcontroller units (MCUs) and analog chips, which can be manufactured with older technology. However, the transition to domestically produced chips in China faces hurdles:

1. Safety and Validation: Automotive chips require rigorous safety standards and extensive validation, prolonging the development cycle.
2. Market Dominance of Established Players: Companies like Texas Instruments and other European and Japanese manufacturers have a robust product lineup, making it challenging for newer Chinese semiconductor firms to gain traction.

“The Chinese government has set a target... to make sure that the chips in your cars, quarter of them are made in China by this year 2025.”
[09:31]

Despite aggressive targets, Kubota indicates that achieving a 25% domestic chip production rate by 2025 is ambitious, with actual figures lagging behind. She anticipates a dual approach where Chinese automakers will increasingly seek locally produced chips while also negotiating with existing foreign suppliers to manufacture more chips within China.

“Chinese carmakers will ask American and other foreign chip makers to make more chips in China so that they can continue using the foreign companies chips.”
[11:18]

Kubota also observes that emerging Chinese chip manufacturers are keen to establish themselves amid the trade tensions, viewing the current scenario as a pivotal opportunity to prove their technological capabilities.

4. Implications of the Trade War on Global Tech Supply Chains

Timestamp: [12:00 – End]

Victoria Craig wraps up the discussion by reflecting on the mutual dependencies exposed by the U.S.-China trade war. The episode illustrates that while the U.S. seeks to curb its reliance on Chinese manufacturing through innovations like Conifer's rare-earth-free motors and enhanced domestic chip production, China similarly grapples with reducing its dependence on American semiconductors.

The episode concludes with a brief return to the earlier CRM meltdown skit, underscoring the persistent challenges in technological operations and supply chain management amidst escalating trade tensions.

Key Takeaways

• Innovative Solutions: Companies like Conifer are developing technologies that could significantly reduce U.S. dependence on Chinese rare earth metals, promoting more localized and sustainable manufacturing.
• Mutual Dependencies: Both the U.S. and China reveal deep interdependencies in their tech industries, particularly in semiconductor supply chains crucial for consumer electronics and automotive sectors.
• Challenges in Localization: Efforts to localize chip production in China face significant obstacles, including stringent safety standards and market dominance by established foreign manufacturers.
• Future Outlook: The path towards technological self-sufficiency for both nations is complex and requires sustained investment and strategic policy support to overcome existing dependencies.

Notable Quotes

• Christopher Mims:
  “Within four years you could have rare earths free motors of the kind made by Conifer and electric vehicles.”
  [04:30]

• Yoko Kubota:
  “China is still reliant on foreign chips, and that includes some American made chips... last year China's imports of semiconductors hit $412 billion and that was still up 10% from 2023.”
  [07:23]

• Yoko Kubota:
  “Chinese carmakers will ask American and other foreign chip makers to make more chips in China so that they can continue using the foreign companies chips.”
  [11:18]

This episode of WSJ Tech News Briefing provides a comprehensive overview of the technological tug-of-war between the U.S. and China, highlighting both the innovative strides being made to reduce dependencies and the significant challenges that lie ahead in achieving true technological independence.