David Woo: What Trump Started is Worse Than a Trade War | Odd Lots

Trump wanted to make stopping the war in Ukraine a top priority and expected to accomplish it in 24 hours; Polymarket initially gave 70% chance of ceasefire by day 100, but that has collapsed to less than 3% currently, indicating Trump has capitulated to hawks on Ukraine.

“Trump started his presidency by making stopping the war in Ukraine a top priority. Okay. He thought that he was going to be able to stop in 24 hours... At the beginning of his presidency, Poly Market was giving a 70% chance that he was going to stop the war basically by 100 days into his presidency. And now it's right now currently less than 3% chance.”

Trump appeased Putin and did not understand that Putin would not agree to a ceasefire without first taking control of the rest of Donetsk, where Russian forces have been stuck in very thrown-out battles for the last six months.

“Trump went on this, you know, Trump offensive with Putin that he appeased Putin. He literally was, you know, I'm not going to use any more exaggerated adjective at this point, but let's put it this way. Trump didn't understand that there was no way in hell that Putin was going to agree to a ceasefire without having taken control of the rest of Donesk, where they've been stuck in basically very very thrown out battles for the last 6 months.”

The US and China were in basically a dead heat for first or second place in all leading technologies according to a Harvard Belfer Center report sponsored by Eric Schmidt that ranked technology leadership across major tech races.

“under B if you remember when Biden became president okay Harvard University Belfer center published a big report in which they did a massive ranking of the technology leaderships across the major tech races... they come to the conclusion the US and China were in basically dead heat in first or second place in all the leading technologies in the world.”

No chairman of the Federal Reserve, regardless of who it is, would cut interest rates in the current environment of tariff-driven inflation without evidence of fiscal tightening.

“There is no way. It doesn't matter whether it's pal or anybody else who was the chairman of Federal Reserve. No chairman of Federal Reserve will be cutting interest rates right now under the circumstances.”

The US relies substantially on China for both finished goods that US consumers enjoy and intermediate goods used in US manufacturing

“the US relies substantially on China, both for finished goods of all kinds of things that US consumers enjoy, but also intermediate goods that are used for actual manufacturing.”

The U.S.-China conflict has transitioned from a 'game of chicken' (where both sides might blink before collision) to a 'war of attrition' (where both sides sustain damage indefinitely until one capitulates from unbearable pain), and the shift in Chinese domestic public opinion from viewing the U.S. as an ally to viewing it as an adversary means China has prepared its population for a long standoff.

“People are wrong to call this thing oh game of chicken because in a game I mean I I I'm a professor of economics here in Israel and I teach game theory. In game theory yeah I mean everybody who's taken a course in game theory they think about game of chicken. Game of chicken by the way is completely irrelevant at this point because in a game of chicken as you know one side will capitulate before the collision so that nothing happens. Okay, nothing happens. So somebody stops before something bad happens. I would argue we've already gone beyond a game of chicken. We're now in a war of attrition.”

China's export to the US is only ~5% of Chinese GDP directly, but indirect effects on supply chains mean 40% of Chinese industrial production depends on US trade; destroying Chinese exports could bankrupt China's investment-dependent business model.

“Chinese export to the US is roughly around 5% of Chinese GDP. If you look at both direct and indirect, you know, 40% of Chinese industrial production... If we can somehow decimate China's export, then we can basically bankrupt their business model and then, you know, the whole economy goes into recession.”

There is very low substitutability for Chinese lights, meaning even Hollywood cannot function without access to Chinese manufacturing, making tariffs impossible to sustain without severe economic disruption.

“I don't even know how Hollywood can basically to do with their lighting without Chinese lights right now at this point because there's very low degree of substitutability.”

When Trump was first inaugurated, he delayed announcing tariffs on China by one day and instead first announced 20% tariffs on Canada and Mexico over fentanyl, suggesting he was not immediately planning aggressive action against China.

“I still remember he did a press conference in the oval office late at night you know on the inauguration day and there was when he announced a 20% tariff on Canada and Mexico over the fentinel okay and he was asked during that press conference why not China you promised to China hard So why did you decide to hit Canada and Mexico but not China? He actually his response was oh because we hit China pretty hard my first time. We're going to give no pass this time. It was not until the next day he announced the 20% for China.”

Trump started his presidency by making stopping the war in Ukraine a top priority and claimed he could stop it in 24 hours, but Polymarket odds for achieving peace by 100 days dropped from 70% at the start of his presidency to less than 3% by the episode date.

“I thought was a huge mistake that Trump started his presidency by making stopping the war in Ukraine a top priority. Okay. He thought that he was going to be able to stop in 24 hours. Forget about 24th. Let's just say he was indeed being sarcastic. But you know, let me tell you this. At the beginning of his presidency, Poly Market was giving a 70% chance that he was going to stop the war basically by 100 days into his presidency. And now it's right now currently less than 3% chance.”

Steve Wickoff is the 'hardest working man in the Trump administration,' having met with Putin three times, met with Iranians twice, negotiated the Gaza ceasefire, and serves as special envoy—making him effectively an unofficial secretary of state.

“Steve Whit, why is Steve Wickoff like the hardest working man in the Trump administration? This is a man who has already met with Putin three times. He's the guy who basically met with the Iranians twice. He's the guy who basically uh negotiated the uh the ceasefire in Gaza. This guy seems to be the unofficial secretary of state.”

Congress and the Senate can agree on nothing except increasing defense spending, with disagreement limited to whether the increase should be $100 billion (House) or $150 billion (Senate), making it politically impossible for Trump to make compromises on China.

“Again, you have to remember, you know, with Elon Musk trying to cut spending, the only thing that the House and the Senate can agree on is to increase defense spending. Like for this, the only difference is, oh, the House wants to increase defense spending only by hundred billion next year. The Senate wants to increase it by $150 billion next year. Everything else going to be going down.”

The Chinese economy is 'already on its knees' with 40% of GDP going to investment, meaning it is fragile and vulnerable to export shocks.

“the Chinese economy is already on its knees. You know, 40% of GDP's investment.”

Steve Wickoff is the most hardworking person in the Trump administration, having met with Putin three times, negotiated Iran ceasefire twice, and negotiated Gaza ceasefire; his prominence reflects Trump's distrust of everyone else and Trump's desire to personally run foreign policy.

“Steve Wickoff like the hardest working man in the Trump administration? This is a man who has already met with Putin three times. He's the guy who basically met with the Iranians twice. He's the guy who basically uh negotiated the uh the ceasefire in Gaza. This guy seems to be the unofficial secretary of state.”

Treasury Secretary Bessent signaling possible 'deescalation with China' caused markets to surge, showing how starved the market is for any hope of negotiation

“Treasury Secretary Scott Bessant at a JP Morgan event in Washington said Bessant sees deescalation with China situation unsustainable. That sent markets surging.”

Trump's trade war against China is fundamentally a war for U.S. hegemony, not merely a trade dispute, designed to economically cripple China's export-driven model so it cannot compete technologically with the United States.

“I think this is much more than just a trade war. I think this is war actually.”

Trump revived the TikTok situation through a direct phone call with Xi Jinping one day before TikTok was supposed to be shut down, despite Congress having already voted for the shutdown and the Supreme Court having allowed it to proceed.

“Tik Tok is a great example, right? I mean the fact is that one day before inauguration, everybody thought Tik Tok was finished. Yeah. Right. I mean was you know Congress already voted, Supreme Court had already gone along and then it was it and then guess what? Trump managed to revive it because over a phone call with Xi Jinping. That was it.”

Deep Seek's AI breakthrough proved that advanced AI can be easily copied and reproduced without proprietary U.S. technology, thereby invalidating the entire strategic rationale for Biden's semiconductor sanctions and triggering urgency among China hawks to escalate immediately.

“Less than a month after Trump became president, we had the Deep Seek News. The Deep Seek News basically was a massive piece of news. I mean, it was a game changer. Let me tell you this. I mean, the Deep Seek News for me is no proof of China's technological prowess, but it is proof that AI can be easily copied. All of a sudden, overnight, all the sanctions that happened under Biden, it was for nothing.”

The Chinese government has explicitly warned Walmart and Costco not to pressure Chinese suppliers to absorb tariff costs, because Beijing believes full price pass-through will inflict so much pain on US consumers that Trump will be forced to back down.

“The reason being that now we all know only a couple of weeks ago I think the Chinese uh in Beijing Chinese officials met with Costco with Walmart and warned them against applying pressure on Chinese suppliers to basically to take the hit on tariff. The reason is because I think from the Chinese perspective, they think that once the price effect associated with the tariff is unleashed onto the US economy, onto the US consumers, it's going to get so bad that Trump will have no choice but to basically stand down.”

Summer 2025 will look like 'a show': US entering recession, Trump's approval rating will collapse, and the situation will become very ugly; the war of attrition will create cascading damage.

“I think it's going to look like a show. I I really believe it's going to be a show. I think we're going to be going into a recession. I think Trump's approval rating is going to collapse. Okay. And I think, you know, the point here is this... I think things are going to get very ugly.”

The only type of deal Trump can do with China at a 145% tariff level is a 'very big deal' (comprehensive negotiation), not a series of small deals, because any small reduction (e.g., 145% to 125% or 100%) still prevents Chinese exports entirely.

“In a negotiation, I thought from the very beginning, that's why I thought Tik Tok was a very good beginning. I thought the only way Trump can do deals with China is by doing a bunch of small deals that eventually add up to a big one. But right now with tariff at 145%. The only kind of deal you can do will be a very big deal.”

China has lost faith in Trump's reliability after he initially offered gestures (Xi was invited to inauguration) and negotiated the TikTok reversal, but then escalated tariffs incrementally every day for three months, teaching them that engagement is futile.

“I have no doubt like you know I mean I think Xiinping was like well you know he got the invitation to go to the inauguration he didn't go but he felt that was a real nice gesture and then he spoke with Trump over the phone and then you know and then even after basically you know China was hit by the 25 20% tariff on fentinel he was probably so thinking that this is going to be okay but it's like it's been getting worse every single day”

Trump's first trade war had limited inflationary effect because Chinese companies rapidly relocated manufacturing to Philippines, Indonesia, and elsewhere, circumventing tariffs; but the second trade war is deliberately designed with reciprocal tariffs on transshipment countries to eliminate this escape route, guaranteeing full price pass-through in summer 2025.

“The reason why the inflationary effect associated with Trump's trade war won was so limited was because Chinese companies were able to set up shop very quickly somewhere else in the Philippines, Indonesia, and wherever they went, they were able to circumvent the US tariff by continuing to export to the US at whatever price they were selling previously to the US.”

If Trump continues a dovish approach toward Russia and Iran (as Steve Wickoff is proposing by capping Iranian oil production at 3.67%, which was a key component of the Obama nuclear deal), then he must escalate against China to avoid appearing weak on both rivals simultaneously.

“If he wants to continue that dovish approach, then he will have to throw some red meat to the China hawks within his administration, which means getting tougher on China. In my view, there is very little.”

We have now moved beyond a game of chicken (where one side blinks before collision) into a war of attrition game theory model, where both sides endure escalating pain until one capitulates, and this is fundamentally irreversible because the damage is being done immediately through hardening of public opinion.

“People are wrong to call this thing oh game of chicken because... Game of chicken by the way is completely irrelevant at this point because in a game of chicken as you know one side will capitulate before the collision so that nothing happens... I would argue we've already gone beyond a game of chicken. We're now in a war of attrition. A war of attrition is another game in game theory except war of attrition. Basically, the game continues even though it continues to inflict pain on both sides, but both sides sort of hang on until one side finally capitulate because the pain becomes unbearable.”

The administration's plan for fiscal-monetary coordination (spending cuts offsetting tariff inflation to allow Fed rate cuts) was never realistic because they didn't plan it in advance and Elon Musk has failed to deliver cuts

“see if you could get Elon Mus to cut spending and that would be deflationary which could potentially offset any inflationary effect associated with the tariff and then you could get the Fed on your side if there's fiscal tightening but right now we haven't got any fiscal tightening because Elon Musk hasn't been able to deliver other than talking big about spending cuts”

The reason Steve Wickoff is so prominent in Trump administration foreign policy is not because of his diplomatic expertise but because Trump trusts him personally, making him merely Trump's messenger rather than an independent strategic voice.

“In my humble opinion, the reason why Steve Wickoff is everywhere is not because it's not a reflection of his diplomatic savvy, but because Trump trust him. Because guess what? I think he's no more than Trump's messenger.”

Trump himself prefers deal-making and positive-sum outcomes with China, as evidenced by the Phase One trade agreement which Woo characterizes as 'one of the best trade agreements signed between two countries in the last 50 years,' but he is being maneuvered by China hawks (Vance, Rubio, Waltz) who see this as zero-sum and are now effectively in control of policy.

“whereas Biden saw the US China rivalry as largely a zero- sum game that is if China wins we lose if we win then China will lose. I think Trump in his whole entire career sees things through the lenses of deals and Trump always understands that basically to do a deal there has to be enough for everybody around the table.”

The key difference between Trump and Biden is that Biden saw US-China rivalry as zero-sum (if China wins we lose) while Trump understands deals require value for everyone at the table; however, Trump has been captured by China hawks and is now operating under a zero-sum framework.

“whereas Biden saw the US China rivalry as largely a zero-sum game that is if China wins we lose if we win then China will lose. I think Trump in his whole entire career sees things through the lenses of deals and Trump always understands that basically to do a deal there has to be enough for everybody around the table.”

Chinese officials met with Costco and Walmart and warned them against applying pressure on Chinese suppliers to absorb the tariff hit, because China believes that once the price effect hits US consumers, it will get so bad that Trump will have no choice but to stand down.

“The Chinese government apparently has decided that the more pass through the better. The reason being that now we all know only a couple of weeks ago I think the Chinese uh in Beijing Chinese officials met with Costco with Walmart and warned them against applying pressure on Chinese suppliers to basically to take the hit on tariff. The reason is because I think from the Chinese perspective, they think that once the price effect associated with the tariff is unleashed onto the US economy, onto the US consumers, it's going to get so bad that Trump will have no choice but to basically stand down.”

The US-China trade dispute is fundamentally about who makes the first move in a standoff, where both the Trump administration and the CCP care deeply about being seen as making the biggest concession.

“there is still this huge question of who would make the first move. Yeah. in this particular standoff and I I think it is a standoff and I think you know both respective policym groups here the Trump administration and the CCP under Xihinping I think they both care about who is seen to be making the biggest concession here.”

China believes time is on its side in the war of attrition, which explains why it won't negotiate until pain becomes absolutely unbearable

“the Chinese believe that time is on their side and and Trump the problem is is when you have a 145% tariff on China how do you even back down from that?”

A 145% tariff on China is not engagement in trade war but rather 'economic murder' because China cannot possibly export anything to the US with such a tariff in place.

“when you're talking about the 145% tariff you're not engaging the trade war you're engaging in basically economic murder I mean that's it I mean I don't see how China is going to be able to export anything to the US with a tariff 145%”

Mexico has been willing to accommodate Trump's demands to approximately 99% by the way, making it more of a pushover, whereas China is treated with differentiated respect as a genuine peer competitor

“Mexico, unlike any other country, has literally been bending forward, backward to meet Trump, like forget about half the way, like 99% of the way. I thought Trump should have granted a deal to basically Shine Bomb literally like 3 weeks into his presidency. He loves Shine Bomb and he didn't. And the reason is because apparently he saw Mexico as being a pusharound. Okay. Whereas China I think is a different story.”

The only way Trump can maintain political support for continuing the trade war is by framing it as being 'about China,' because anyone who stands up for China is immediately labeled a traitor; the China hawks have prevailed by making anti-China sentiment the only politically acceptable position.

“the only way Trump can actually keep going with this trade war by getting the support from the general public from Congress is say you know what this is about China. Nobody right now will say oh wow let's you know let's be nicer to the Chinese because right now anybody who stands up to the Chinese they're seen as traders right away. And that to me is the most interesting part of the story which is that I think the China hawks in many ways have prevailed”

Trump has two choices: either pivot by getting tougher with Putin (increasing geopolitical risk and bullish gold), or get tougher on China because he cannot be seen as weak on both Russia and China.

“At this point, in my humble opinion, Trump has one of two choices. He could either pivot by getting much tougher with Putin. Okay. So, you see an increase in geopolitical risk and bullish gold or that he has to go even tougher on China because at this point, you know what? You cannot be seen as being weak on both Russia and China.”

Trump's Phase One trade agreement with China in 2020 was one of the best trade agreements signed between two countries in 50 years because it was structured as a genuine win-win deal, fundamentally different from the zero-sum framing of the current conflict.

“I'm probably the only person who's been on your show who's read the back to back 100 page Phase One agreement that was signed between Trump and the Chinese back in 2020... that trade agreement, in my humble opinion, was one of the best trade agreements signed between two countries in the last 50 years. And the reason was because it was a win-win basically deal.”

The only way Trump can negotiate with China is through a series of small deals that eventually add up to a large agreement; but 145% tariffs make even small deals impossible since reducing them to 100% or 125% provides no material benefit to China.

“I thought from the very beginning, that's why I thought Tik Tok was a very good beginning. I thought the only way Trump can do deals with China is by doing a bunch of small deals that eventually add up to a big one. But right now with tariff at 145%. The only kind of deal you can do will be a very big deal.”

Xi Jinping is currently not returning Trump's calls or does not want to talk to Trump, which partially reflects a rational response to repeated disappointed expectations.

“Xiinping right now is not returning the call or doesn't want to talk. Okay? And I can partly understand why.”

A week before the interview, Chinese survey respondents showed a dramatic spike in viewing the US as an enemy/adversary (46%) versus Americans viewing China as such (40%), indicating China is now preparing its domestic population for extended conflict rather than seeking negotiated exit.

“I'm conducting surveys of Chinese people and American Americans every single day to gauge how they feel about each other... even until a week ago, the Chinese people when you ask them like, 'Is the US an enemy or an ally?' most Chinese people said ally... Now basically 46% of Chinese said America is an adversary or an enemy versus only 40% of Americans who consider China as such.”

Approximately 90% of high-end professional spotlights are now manufactured in China, demonstrating that China manufactures not just low-end consumer goods but advanced technical products.

“like literally 90% of the high-end spotlights now are manufactured in China, okay? I mean, that that's just that's just a fact, right? So, they don't just make low-end stuff. This is really high-end stuff.”

Trump appeased Putin by not pushing for a ceasefire that included Putin's control of all of Donetsk, not understanding that Putin would not agree to a ceasefire without fully controlling Donetsk after being stuck in brutal battles there for 6 months.

“Trump went on this, you know, Trump offensive with Putin that he appeased Putin. He literally was, you know, I'm not going to use any more exaggerated adjective at this point, but let's put it this way. Trump didn't understand that there was no way in hell that Putin was going to agree to a ceasefire without having taken control of the rest of Donesk, where they've been stuck in basically very very thrown out battles for the last 6 months.”

Scott Bessent is a nice person but does not understand 'the hatred there is for China in Washington' the way a political operator would, and therefore lacks influence over Trump relative to someone like Steve Mnuchin had in the first term.

“Scott is a very nice guy. Scott is not a China hawk. I wouldn't say Scott is a China hawk. He's certainly, you know, he he doesn't hate China in that sense. But there are a lot of people within administration who think that this is the time to destroy the Chinese economy once for all.”

The housing and infrastructure spending Elon Musk announced as DOGE (Department of Government Efficiency) goals have not shown evidence of actual execution, suggesting that Musk's $2 trillion target for cuts down to $1 trillion then $150 billion is largely talk.

“Elon Musk was like you know what he had three months after the uh the election to prepare for Doge, right? I mean he supposedly had like hundreds of legal advisors, all sorts of people. They figured out everything. And guess what? It's gone from $2 trillion to $1 trillion. And then in whatever 10 days ago he declared Trump's cabinet, he's going to find $150 billion of cuts for the 2026 budget. I mean I track the daily US Treasury statement, okay, which tracks every single like whatever in aggregate but in very detailed form of every dollar that goes out of the Treasury account that the US federal government keeps with the Federal Reserve where all this money goes in and out. And let me tell you this, I cannot see any evidence of any spending cut so far. Okay?”

Things will 'bottom' (reach a settlement point) only once Trump and Xi Jinping have gotten on the phone or Trump announces he's going to Beijing, but the situation is not bad enough yet for Trump to make that move.

“I mean, I think we we can only we can say right now that things will probably bottom once the two men have gotten on the phone or that for that matter Trump announces he's going to be on his way to Beijing. To me, things are not bad enough for him to get to that point. So from that point of view, this is why I think, you know, at least in the near term, I think stocks are still going lower.”

From a game theory perspective, Woo cannot see a way out of the current U.S.-China impasse despite being trained in game theory.

“If I put my hat as a game theorist on right now I'm struggling to see a way out right now”

Trump did not grant a deal to Mexico despite Mexico bending 99% of the way to meet Trump's demands three weeks into his presidency, because Trump viewed Mexico as a pushover rather than a peer negotiator like China.

“Mexico, unlike any other country, has literally been bending forward, backward to meet Trump, like forget about half the way, like 99% of the way. I thought Trump should have granted a deal to basically Shine Bomb literally like 3 weeks into his presidency. He loves Shine Bomb and he didn't. And the reason is because apparently he saw Mexico as being a pusharound. Okay. Whereas China I think is a different story.”

Trump is personally suspicious of everyone in his administration, including Secretary of State Rubio, and insists on managing negotiations with China directly via phone call with Xi rather than delegating to professional diplomats.

“Trump wants to basically manage the entire process on his own he wants to talk to Xiinping directly this is why he doesn't want to send people to China, talk to the Chinese. He wants to get on the phone with Xiinping and Xiinping right now is not returning the call or doesn't want to talk.”

Americans have not yet begun to feel any impact from tariffs because inventory built up in Q1 2025 (as companies anticipated tariff increases) is still providing a buffer in the supply system.

“right now what's happening is that the inventory in the system and then there's no doubt inventory got built up in Q1 because a lot of companies anticipated the tariff increase that's providing a bit of a buffer. wait until we get into June when prices either will go up or that there will be no stock to the extent that just you know the whatever you want to basically buy is simply not available.”

Trump is surrounded by 'really terrible advisers' who did not properly inform him about the inflationary consequences of tariffs, leading him to make decisions based on flawed assumptions from his first term.

“I think you know in a way I think you know the pain is like absolutely and I think this is where Trump is very misinformed by the way I truly believe Trump is surrounded by some really terrible advisers who at least didn't tell him the full story because when it comes to the trade war I can just tell you I mean I I think that every step of the way I think you know they misfired”

Elon Musk had three months after the election to prepare DOGE with hundreds of legal advisors; he promised $2 trillion in spending cuts but recently downgraded to $150 billion for 2026 budget; Treasury statement data shows no evidence of actual spending cuts so far.

“Elon Musk was like you know what he had three months after the uh the election to prepare for Doge, right? I mean he supposedly had like hundreds of legal advisors, all sorts of people. They figured out everything. And guess what? It's gone from $2 trillion to $1 trillion. And then in whatever 10 days ago he declared Trump's cabinet, he's going to find $150 billion of cuts for the 2026 budget.”

Things will probably bottom out for markets only once Trump and Xi Jinping get on the phone or Trump announces he's going to Beijing; but things are not bad enough yet for Trump to take that step, so stocks are likely to decline further.

“I mean, I think we we can only we can say right now that things will probably bottom once the two men have gotten on the phone or that for that matter Trump announces he's going to be on his way to Beijing. To me, things are not bad enough for him to get to that point. So from that point of view, this is why I think, you know, at least in the near term, I think stocks are still going lower.”

Approximately 90% of high-end professional spotlights are now manufactured in China, illustrating that China manufactures sophisticated goods, not just low-end products, and creating supply vulnerabilities for advanced manufacturing globally.

“literally 90% of the high-end spotlights now are manufactured in China, okay? I mean, that that's just that's just a fact, right? So, they don't just make low-end stuff. This is really high-end stuff.”

Americans have not yet begun to feel the tariff impact despite stock market declines, because inventory built up in Q1 is providing a buffer; real pain will arrive in June when inventory depletes and either prices rise or products become unavailable.

“Americans have not even begun to feel the even iota of the tariff... right now what's happening is that the inventory in the system and then there's no doubt inventory got built up in Q1 because a lot of companies anticipated the tariff increase that's providing a bit of a buffer. wait until we get into June when prices either will go up or that there will be no stock to the extent that just you know the whatever you want to basically buy is simply not available.”

The core issue is China feels Trump and his team have had three months to demonstrate good faith, but things have gotten worse and worse; China cannot distinguish between Trump personally and China hawks like Vance and Rubio, so they are preparing for indefinite conflict.

“I think China sort of feels like you know they gave Trump three months and then things got worse and worse and worse. Maybe they have no idea if it's Trump or Trump's adviser, the China hawks and so on so forth. All I know is that they can no longer engage. Okay. Ah basically so therefore they are preparing the population in China for a long standoff.”

Xi was probably thinking things were going to be okay after the 25% fentanyl tariff, but the situation has gotten worse every single day since, destroying any remaining trust between Trump and Xi.

“I have no doubt like you know I mean I think Xiinping was like well you know he got the invitation to go to the inauguration he didn't go but he felt that was a real nice gesture and then he spoke with Trump over the phone and then you know and then even after basically you know China was hit by the 25 20% tariff on fentinel he was probably so thinking that this is going to be okay but it's like it's been getting worse every single day”

Scott Bessent is a nice guy who is not a China hawk and doesn't hate China; he's an academic philosopher and hedge fund type who thinks in grand theory but lacks day-to-day influence over Trump and didn't have the trusted relationship with Trump that Steve Mnuchin had.

“I feel sorry for Scott Bess. I guess Scott is a very nice guy. I know Scott... Scott is not a China hawk... But that to me is again just shows that this administration is off to a terrible start... Scott did not have the same kind of relationship that Steve Minutuchin had with Trump in his first term... Scott is more of an academic philosopher hedge fund guy who thinks big in terms of like the theory but like I think in terms of the day-to-day stuff I don't know how much influence he has over Trump”

From a game theory perspective, as a professor of game theory, Woo cannot see a way out of the current US-China conflict; the war of attrition model offers no clear offramp.

“so if I put my hat as a game theorist on right now I'm struggling to see a way out right now But maybe you know you I'm sure you'll find better you know more more smart against you do let me know like you know what what is the way out here”

The summer of 2025 will be a 'show' (disaster) with U.S. recession, Trump's approval rating collapse, and pain that Americans will actually feel.

“What does this summer look like to you in the United States given this war of attrition dynamic that's going on? I think it's going to look like a show. I I really believe it's going to be a show. I think we're going to be going into a recession. I think Trump's approval rating is going to collapse. Okay.”

Trump and Xi are not communicating directly, even back channels are not working; Trump wants to manage the entire China process personally by calling Xi directly, but Xi is not returning the call, indicating China has given up on direct negotiation.

“Trump and she are not talking like even the back channel is not working and one reason is interesting because Trump wants to basically manage the entire process on his own he wants to talk to Xiinping directly this is why he doesn't want to send people to China, talk to the Chinese. He wants to get on the phone with Xiinping and Xiinping right now is not returning the call”

Peter Navarro's PhD is 'not worth a piece of paper' because his education failed to make him understand the difference between the structural conditions of the first trade war (which allowed Chinese companies to relocate) and the second trade war (which blocks relocation).

“I don't care where Peter Var got his PhD is worth nothing his degree is not worth a piece the papers written on. But let me tell you why.”

Trump is 'throwing a tantrum' and 'pounding the table' saying 'Powell's not doing his job,' which reveals that the administration has realized its assumptions about the trade war were completely wrong and is now panicking.

“So from that point of view for Trump to be basically throwing a tantrum right now, pounding the table said, "Well, Pal's not doing his job." That to me again just shows that this administration is off to a terrible start to the extent that the assumptions that they're making for where they get to now were completely wrong.”

The administration is off to a terrible start because there are many mistakes that cannot be undone once the crunch arrives.

“I kind of feel like I I think there are a lot of mistakes have been made and what worries me more than anything else is that maybe these mistakes cannot be undone. Okay. What happens when the crunch arrives?”

Trump is surrounding himself with terrible advisers who haven't told him the full story about tariffs, trade war dynamics, or the Fed's constraints; his errors reflect bad advice rather than lack of understanding.

“I truly believe Trump is surrounded by some really terrible advisers who at least didn't tell him the full story because when it comes to the trade war I can just tell you I mean I I think that every step of the way I think you know they misfired”