00:00 Speaker A
China announced Friday that it will raise tariffs on US goods from 84% to 125%. It’s the latest salvo in an escalating trade war between the world’s two largest economies that has rattled markets and raised fears of a global slowdown. Joining us now, Isaac Stonefish, strategy risks founder and CEO. Um, Isaac, uh, it’s been a little while since we’ve talked, certainly since this back and forth really heated up here, and as someone who is a a close student of this relationship between the US and China,
00:35 Speaker A
is it impossible to predict what happens next? What are what are some of your best guesses as to how things develop from here?
00:45 Isaac Stonefish
With the caveat that these have to be guesses, I do think the recent, we are basically at the bottom where I think things are going to go in the near term. I do think the relation is going to devolve in months, years. I think this is just a taste of what’s to come, but I do feel like with this roller coaster, we’re going to go down perhaps a little bit more, and then relations will improve. China will come to the negotiating table, the two sides will potentially strike some sort of deal, and then six months, a year, two years later, things will be far, far worse.
02:00 Speaker A
Isaac, I wonder, what do you think the risks are that Beijing starts to really go after American companies, Isaac, that do a lot of business in China? What what could that look like?
02:16 Isaac Stonefish
So, for folks who are in the trenches there, they know that Beijing has been making it a very inhospitable place to do business for years, if not longer. And I do think you’re right, I do think things could get quite worse. I think what they could see are tax irregularities, permitting problems, harassment, arrest, torture of workers. And I do want to point out, for American companies, their Chinese staff are far more vulnerable. And so, when Beijing targets individuals working at American companies in China, usually it’s the Chinese employees who bear the brunt of it.
03:06 Speaker A
And Isaac, so you’re an American CEO, you’re hearing this right now, you’re listening to this. What do you do, Isaac?
03:16 Isaac Stonefish
So, what you do is threefold. You better price your China risk, which means looking at all of your partnerships with Chinese entities, your supply chain, your joint ventures. You make sure that you’re taking care of your staff and you put safety first, and you do not put your Chinese staff in a line of fire, and you come up with a plan for what happens if the US and China stop just fighting a trade war and have an actual war. What do you do in that case to make sure that you are protected, and that your business can go on not as usual because things would be radically different, but that you have a plan in place.
