Council of Foreign Relation's Michael Froman Talks Trump/Xi Summit

SPEAKER_1 (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Tom (0:08)

This is the conversation of the day. Good morning, Liz Economy, you're not Michael Froman is. Mr. Froman, folks, is definitive across the arc of the modern age of our trade and international relations. It is an earned ability as Chief of Staff ages ago to Robert Rubin, and far before that, with all of his work accounts on foreign relations and Foreign Affairs magazine. You know, I am full disclosure, folks, I'm a member. Paul, have I paid my dues? I can't remember.

Paul (0:37)

I'll take a look. We'll take a look, okay.

Tom (0:39)

You got Rebecca Patterson, Sebastian Malaby with their new podcast. CFR and Foreign Affairs are on fire. And the reason they are is a million years ago, Michael Froman, before trade, before public service, wrote an essay called Negotiating From Strength. This is ancient, ancient history, back at Woodrow Wilson Princeton years ago.

Is President Trump negotiating from strength in the festivities this week?

Michael Froman (1:07)

Tom, I think you may be the only person who ever read that essay. I am very impressed.

Tom (1:12)

The worst moment for me was Paul Krugman's first essay at Yale was on the economics of Star Trek.

Paul (1:18)

He got angry at me for pulling that up.

Tom (1:20)

So you wrote that essay years ago.

Paul (1:22)

I did.

Tom (1:23)

And from the arc of George Marshall in World War II over to where we are now, are we negotiating from strength with China?

Michael Froman (1:29)

Well, look, we have a lot of strengths in our economy, clearly. And we're growing from a technological perspective on AI. We're still very much in the lead, at least in terms of innovation. But China is a peer competitor now in many respects. In many technologies, they are ahead of us. In others, they are trying to catch up.

And while we have a uncomfortable detente at the moment, I'd say, sort of a strategic stability, there is a lot of tension beneath the surface and a lot of issues yet to be resolved. So there's a lot to negotiate in this summit that's happening today. We'll see what really comes out of it.

Paul (2:08)

Michael, I was looking at the schedule today for the meetings and all the pageantry and the meetings between President Xi and President Trump. There's not a lot of meeting time.

There's not a lot of business time here. There's a lot of pomp and circumstance, a lot of dinners, a lot of parades. Is there any expectation that anything's going to get done yet?

Michael Froman (2:25)

Expectations are very low. I mean, you're absolutely right. There's a big emphasis on pageantry, including the president going to Joint Base Andrews yesterday to welcome President Xi himself, the flyover, etc. So we're rolling out the red carpet for President Xi.

In terms of expectations of outcomes, I think Secretary Besson has already announced that there will be a short extension of the trade truce for a couple of months beyond November. So that'll take some pressure off.

There will be some discussion, I imagine, of Chinese purchases of agriculture products, energy products, potentially other products. They haven't followed through on some of the previous commitments they've made, so perhaps holding China's feet to the fire on that. One big issue will be this AI dialogue that has been announced, which is fraught because neither the president seems to be very enthusiastic about imposing regulations on AI, and it's very unclear what the Chinese would want to do with us. So it's interesting that there is an announcement around that. And then everyone will be watching to see, is there some new language around Taiwan? Maybe not in an official statement or a communique, but in what the president says offhand.

Tom (3:34)

But come on, Froman 101 is the Chinese will always outweigh us. They have to be briefed on the midterms. They have to be briefed on the chaos of the election of 2028

Is Xi in a position where he just outweighs the American experiment?

Michael Froman (3:53)

Certainly, China believes that there is a historical trajectory where they are on the rise and the US is in decline.

I think the reality is, and you know this well because you follow it so closely, China has more than a share of challenges, from the demographics to the economic model, which seems to be running out of steam. You can only export your way to growth for so long at the size that they are.

Tom (4:15)

See how he does that? He's stealing from Liz Economies Act.

Michael Froman (4:19)

Liz is a great former colleague and a great expert on China. So I think while China does have a long view of things, they've got a lot of challenges in the short and medium term that they need to work through as well.