Like, this seems like a really cross-cutting sort of dispute to me, but how do you see it?

Yeah, I mean, well, I, I can't remember another time when, uh, names of lakes came into play.

Uh, but [laughs] I guess, I mean, there's a, a few things I would say here.

The first is, look, before, uh, joining the Biden administration a- and the State Department, you know, I was an academic economist, so I was thinking about these things largely through the lens of, you know, at least borderline rationality and, you know, [laughs] rational actors.

Uh, when you get into government, you realize, "Oh, man, like, that's not how this works at all." [laughs] You know, people's, uh, emotions really do play an important role in these things.

And I think that, you know, I think this administration, while it understands the importance of emotions in domestic politics, I think it really underestimates or misplays the role of emotions internationally.

I think, you know, we've heard this from a lot of diplomats here in DC, and we've tried to explain this to the administration a lot of times.

Phil, what's your take on transatlantic trade?

It does not.

So being a little bit less glib, I think in a glass half full way of thinking about it, I actually think it's a good thing they're talking about managed trade in the sense that I think at the beginning of this administration, I was saying that, "Look, we may have many conversations, but we're not gonna have the important conversations." And to me, there are two really big, important conversations to have with China.

One is, are we comfortable buying from and selling to each other, right? What are the things we're willing to trade in terms of creating vulnerabilities, in terms of the supply chains or just sharing technology, things like that.

A discussion around managing trade in this way is at least tangential to that.

What are we willing to trade with one another? The other piece, which I think a lot of people have thought about for a long time, and in some sense a failure of the WTO architecture is, it doesn't work great for an economy that's not super market-based.

Because the whole idea of the WTO system is we will lower tariffs, and through those tariff rate changes, through price changes, which is what tariffs are, trade will equalize, right? Well, if you have a pretty centralized economy that relies hugely on sort of state subsidies, you can lower tariffs all you want, but you're still gonna have China with a $1 trillion trade surplus because of the internal policies, right?So that second piece is how do we manage trade in a way that the balance of trade is considered fair, right? So it's what do we trade, and how are we making sure both sides think it's fair? That would be my ...

To the degree to which a word of trade or conversation around managed trade can be productive, it does get us closer to talking about those two things in a way that we kind of haven't.

Um, so where are we on rare earths? Is China implementing its side of the bargain from Busan, and is that enough?

Mexico is a top auto supplier here to the U.S. What are some other areas that would be impacted outside of autos? I think that might be a surprise to a lot of people that we get so many imports of autos coming from Mexico.

yet we get the the the north american auto supply chain is incredibly integrated uh... your average car that's cruise united states is going across the canadian and mexican borders about six or seven times before it's completed uh... and that's another reason that bilateral trade deficits that uh... trump is uh... complaining about don't really make a lot of sense because of the final good once it comes across the border a lot of that's embedded u s content So those numbers don't really they're not something you should really be thinking about.

All

That seems like a very aggressive move and something that could lead to retaliatory tariffs as well.

Yeah, absolutely.

And that's a point we haven't really raised when talking about the economic impact of the Canadian and Mexican tariffs.

That's all saying that these are all impacts without any retaliation.

So that's obviously going to happen as well.