School of War - Ep 242: Michael Sobolik on On Donald Trump’s Trade War with China

Episode Date: October 24, 2025

Michael Sobolik, senior fellow at Hudson Institute and author of Countering China’s Great Game: A Strategy for American Dominance, joins the show to discuss the current state of relations between the U.S. and China as Xi Jinping and Donald Trump are scheduled to meet in South Korea next week. ▪️ Times 00:00 The Broader Competition: US-China Relations 02:51 Trump's Trade Strategy: A Historical Perspective 09:35 China's Strategic Objectives: Beyond Economics 14:16 Xi Jinping's Goals: The Summit Agenda 18:20 Export Controls: A New Era of Trade Tensions 22:36 The Stakes of No Deal: Economic and Strategic Implications 26:35 Decoupling from China: Challenges and Opportunities 33:05 Defining a Good Deal: Beyond Trade 37:22 TikTok: The Information Warfare Front Follow along on Instagram, X @schoolofwarpod, and YouTube @SchoolofWarPodcast Find a transcript of today’s episode on our School of War Substack

We spend a lot of time on School of War talking about military scenarios in the Western Pacific. But the threat of a hot war with China over Taiwan or any other number of potential flashpoints occurs within a much broader and extremely complicated competition between the two countries. This competition, which plays out in trade and high-tech exports, in AI, in the exploration of space, and so much more. Well, this competition is for all the marbles. President Trump is going to sit down with China's Chairman Xi next week in South Korea. And many of these issues will be on the agenda. Let's go through them.

Let's get into it. It is for 504 months of Vietnam is to end in a state. We continue to face the grave situation in the ground. We shall fight on the beaches. We shall fight on the landing ground. We shall fight in the fields and in the streets. We shall never surrender. Hi, I'm Aaron McLean.

Thanks for joining School of War. I'm delighted to welcome back to the show today. Michael Sobolick, he's senior fellow at the Hudson Institute. He came on the show last time to talk about his excellent book, Countering China's Great Game, a strategy for American dominance. And today we are going to talk about the state of play in U.S.-China competition as President Trump is about to head to East Asia and meet with Xi Jinping. Mike, thank you so much for joining the show. Thanks for having me back, Aaron, always great to talk. So the president is likely to sit down with Xi about a week from today. We're recording this here on Wednesday, October the 22nd, and this episode will be up on Friday.

Not too long after that, this discussion is meant to occur. There's going to be a lot on the agenda. Trade is obviously at the top of the list for everyone. Maybe take us back to the start of this year when President Trump came back into office. What is the president's strategy on trade with regard to China? What do his objectives seem to be? And how's it going? Well, there have been a very small number of issues that Donald Trump has remained consistent on,

not just in his political life, but in his entire public life. He is known as a mercurial president who has no problem with adjusting or changing his position to gain leverage in the pursuit of a deal, which we all know he loves. But there have been a few issues that President Trump has remained doggedly consistent on. One of them was that Iran will never be allowed to have a nuclear weapon. And a second one is that tariffs are the most beautiful word in the English language, and taking advantage of America is really bad. He has remained incredibly clairvoyant and consistent on that second issue for years now. And what is, I suppose, similar to his first term, he came into office in 2017 for his first term, wanting to cut a deal with China and to hold them accountable for all the ways they were taking advantage of our trade laws, stealing intellectual property from U.S. companies, and basically using the allure of China's market to do that.

And also, Trump has this longstanding gripe about China not buying enough of China. of American exports, like he does from many other countries. So the outcome of that policy agenda in his first term was the phase one trade agreement, which wrapped up in the opening months of 2020 just before COVID-19. And there was mixed compliance and mixed enforcement of that deal during the Biden administration. So now, President Trump got back into office in January, and he knew. not only wanted to better enforce the deal he previously negotiated, he wanted to fix and address the broader economic imbalances between the U.S. and China, as he did with the whole world,

which takes us to April of this year, which was April 2nd when he announced his sweeping Liberation Day tariffs, which was a gambit on the president's part, not only again to fix the U.S.-China imbalance, but essentially to erase America's trade. deficits globally with its trading partners. So when you ask, how is it going, it's going to be a piecemeal answer because he's pursuing bilateral negotiations with every single country that he is applied tariffs to. But we're talking about China today. So when it comes to China, I break this up into four different chapters over the course of 2025 for how the U.S.-China relationship with trade has been going. Chapter one began.

And with April 2nd, with those Liberation Day tariffs, and then if you and your listeners will remember, he paused tariffs on the rest of the world shortly thereafter except on China. That was the one country he did not pause tariffs on. And China retaliated with its own tariffs. And then the president ratcheted up our tariffs. And we, if all of us, I think, can probably remember this summer when we were looking at Washington and Beijing on the brain. of a full-blown trade war at tariff levels that would have amounted to an economic embargo. It would have made trade functionally impossible.

That was Chapter 1. Chapter 2 was when both sides got to the table because something happened during that trade war in Chapter 1. China played a very powerful policy card, which was controlling the exports of refined rare earth elements to U.S. companies. rare earth elements are not necessarily rare in terms of, like, you can find them throughout the world, but it's a laborious process to refine, not necessarily expensive, but it's very dirty

environmentally and it's laborious to do, but it's quite essential for the 21st century technologies we depend on at a consumer level to a military grade level. And it turned out that was a big choke point in our reliance on China. So Xi Jinping played that card. Trump responded with some leverage of his own, which brought us to Chapter 2, which was a bilateral attempt to de-escalate the conflict and come to a modus Vivendi.

Tariffs were paused and had a number of different European locations from Geneva to London to Madrid. U.S. and Chinese teams were trying to come to a win-win outcome. But then that began to fall apart very recently. Chapter 3 only began a couple weeks ago when China impose sweeping export controls on rare earth elements in advance of this meeting between Trump and Xi that you just mentioned, Aaron. And the United States specifically Scott Besant Treasury Secretary, Jameson Greer, the trade rep, are trying to figure out how to walk China off of this brink because it is a sweeping export control that categorically. not only outpaces our own controls, but is going to be very difficult to comply with and enforce,

and we give Beijing veto power over the most critical technologies in the world today. So chapter four, the final chapter, is what's about to happen in South Korea at this meeting between Trump and Xi. So I'll have to say we are living in the middle of this story. We don't know how it's happening, but we do know it's a contest of wills. There's leverage on both sides.

and it's a game of chicken. So there's a lot there to unpack. In a minute, I want to get to this question of export controls and what are they and, you know, what is the United States done traditionally with export controls and what these Chinese export controls are and how they differ. But before that, you know, if President Trump's objective in his trade strategy with regard to China is to do something like restore fairness to the arrangement, where instead of China taking advantage, having full access or nearly full access to American markets,

but not giving the same access to Americans and American companies, he wants to, it's an economic plan with an economic goal, it seems to me. There have been bad deals and bad arrangements, and there need to be better deals and better arrangements. What's China's objective through all of this? Is this, from the Chinese perspective, seen principally through an economic lens? How do they understand the trade war, which seems to be we are at least flirting with? Did they understand it in primarily economic terms? How does it nest into their broader strategic worldview?

Not primarily in economic terms at all. This is the biggest difference between Donald Trump and Xi Jinping and between the Trump administration and the Chinese Communist Party at the moment. Donald Trump has a unique perception. perspective on international politics in a way that his predecessors in his office haven't necessarily shared. Donald Trump was never a politician until he assumed the presidency. He was a donor, to be sure, and he ran for president previously. But Donald Trump's education, so to speak, was through Manhattan real estate and from being a tycoon of business and entertainment in the United States. And it should be no surprise to anyone that Trump comes into, international politics and foreign policy with a primarily commercial and transactional lens of trade and commerce. He's not the only president to care about it, but he does uniquely elevate it to the highest policy objective of statecraft for America. Now, it's important to note

Xi Jinping absolutely cares about commerce and about trade insofar as it advances China's interests, but it is subservient to something else. You and I, Aaron, the last time we had a conversation on this podcast, last time I was on, we spent a lot of time talking about geopolitics. And we spent a lot of time talking about China's Belt and Road Initiative, which is basically Xi Jinping's pet foreign policy project to rejigger the economic orientation of the world away from Washington and toward Beijing in a number of different ways. And economics in that approach to statecraft is the handmaiden of strategic objectives that are defined by politics and not by wealth, not defined by trade deals like it get negotiated, but by an increase of political influence of Beijing measured by the political resiliency, dominance and security of the Chinese Communist Party, and of the exportation of,

China's political system around the world. The Chinese Communist Party is undertaking a grand strategy. Xi Jinping is the current caretaker of this grand strategy, and he has left his mark on it, but this isn't necessarily unique to Xi. Ever since Mao, the CCP has been very clear that the United States was a long-term enemy of the People's Republic of China.

Deng Xiaoping is very famous for his aphorism of hide your capabilities and bide your time until you're able to actually confront your adversary. It's a widely referenced quote that actually has the virtue of being very explanatory for what China has been doing for a long time. These guys meeting the Chinese Communist Party and the elites in Beijing,

I assess them to be true believers of a Marxist worldview, and I think the current makeup of the standing committee of the Polar Bureau bears that out. And they are out not only to make the party safe and secure internally within China and not just to unify Taiwan, which is Xi Jinping's most immediate ambition, their goal is to remake the post-World War II order, the post-Cold War order. And it's interesting that they are doing that at the same time where Donald Trump is applying pressure to allies and partners. of the United States, both in the commercial realm and in the military realm, particularly when it comes to Ukraine. So there are definitely opportunities for the party to exploit, but that asymmetry is key and it's crucial

because the fact that Trump is pursuing a deal at all has an assumption behind it, which is that you're dealing with a good faith negotiator that wants the same thing you want. And it's not clear to me that Xi Jinping wants the same thing Donald Trump wants. Okay, so if there's a short-term Trump administration goal, which is a deal, a deal where presumably the tariffs and restrictions, export controls, things like that, are rolled back but to a position which is, in Trump's view, more economically advantageous to the United States than the status quo. And that's the sort of short-term objective there on that file, which is, you know, the principal file, the major file for the president, this economic file. what's the Chinese let's let's brainstorm a bit what's the Chinese short-term goal like what's the best possible outcome for China out of this summit for example you know we've seen Putin now several times over the course of 2025 either seek or actually have conversations with president Trump

where clearly Putin's goal is to drive a wedge between Trump and the Europeans and sort of enlist the president in an effort to compel Ukraine essentially to surrender to sort of maximalist Russian goals in Ukraine. Putin's been unsuccessful, by the way. Each time he's played this hand, each time so far it's failed, but he's tried multiple times. What do you, what's like the worst case scenario? The Chinese win this summit.

What do they try? What does that look like? Xi Jinping is going to South Korea with at least three asks. One of them remove all tariffs on China, probably unrealistic in the short term. Number two, remove all export controls on China, particularly technological and AI export controls. The third has to do with Taiwan and America's relationship to Taiwan. I will not be surprised if Xi Jinping asks Donald Trump to come out in direct opposition to Taiwanese independence. And that goes under the file of Beijing's longstanding interest to isolate Taiwan and to whittle away at a

America's commitment and potential support for Taiwan in the event of a crisis. Those are the three things that she will care about the most. And it's interesting, you mentioned what Putin is doing with trying to drive a wedge between allies. When it comes to what she is doing with export controls, the wedge that he's driving is actually internal within America. It's between, quote unquote, China Hawks in D.C. and AI optimists. in the United States that want to allow U.S. companies to sell as much of their products as possible around the world. Xi Jinping wants the semiconductors, these really intricately designed and manufactured chips that are powering the AI revolution because China can't make the best chips in the world.

Navidia, an American company, can design them and TSM, a Taiwanese company, can produce them. But because of our export controls, we do not allow those chips to go to Chinese companies. So Xi Jinping wants us to lift those and as unlikely as I think it will be that Donald Trump will lift every single tariff on China. There are some advocates for China's position on export controls inside of the administration and around Washington and inside of Silicon Valley. That will be interesting. the Taiwan question. I am concerned insofar as the rumor mill in D.C. always has speculation about how a transactional president might assess or how low he might assess Taiwan's meaning and value to America. What gives me hope and optimism there is just as Putin runs into his own problems with negotiating, Xi Jinping and the CCP tend to be their own worst enemies as well.

and I think he has an uphill climb with convincing Trump to so brazenly and publicly sell Taiwan down the river. But that's going to be his agenda. I want to understand these export controls a little bit better. I mean, we've had export controls on stuff that otherwise would go to China for some time. You described the export control regime that China just announced that's meant to roll into effect in the coming weeks in very dramatic terms. I've also heard it said that, look, we we, we, we, we, we. We control exports to them. Now they're controlling exports to us.

It's kind of all tip for tat the same thing. Do you accept that characterization? If not, what is different about this latest Chinese round? No, I do not accept it. I think it's a false equivalence. How the United States manages our own export controls, like there are some details here, but it's important to at least dip down a little bit to understand the nuance here.

Whenever we impose an export control, by and large, it is not because we want to pre-reveau. the sale of a good service or technology to everyone in the whole world. That's not the point of export controls. The point of export controls is to serve the national security of the United States and to not work against it, which means that the only end-user customers we care about are from adversarial countries or entities controlled by a foreign adversary. So if you want to sell AI chips to an ally, say Japan,

or even Israel or the UK, those countries wouldn't necessarily fall under an export control regime where an American company we need to get approval from Washington to make that sale. But if you're going to a Chinese company, particularly once with links to the People's Liberation Army, suddenly export controls begin to come into your compliance picture. What China did was fundamentally different. These export controls that their Ministry of Commerce rolled out,

out said the following. If you have an item that you want to sell and that item has more than 0.1% of Chinese rare earth elements in it, like if the value of that can be attributed to more than 0.1% of Chinese rare earths, then you need to go to China's Department of Commerce to get approval if you want to sell it anywhere in the world. It gives you. It gives you. gives Beijing, or it would in theory, give Beijing veto power over commercial transactions from the most banal and daily to the most strategic. It was highly escalatory. The timing of it this close to the summit was also very interesting, clearly an attempt

by Xi Jinping to get extra leverage for the negotiating table. And there's a reason that Treasury Secretary Scott Besant, and Jameson Greer from the U.S. trade representative, there's a reason both of them have been so public in calling out not just the policy and how ridiculous it is in its scope, but the negotiators on Beijing's team that are making these demands. It's not normal that U.S. officials will call out their counterparts and other governments by name, but Scott Bassett did that recently with his Chinese counterpart, and guess what? he got removed from those negotiations. So I give the administration a lot of credit for taking this seriously. Now it's up to them to figure out how to have their own leverage ready. So if Xi Jinping does not, in fact, back down, a no deal would be better than a bad deal,

because that kind of power grab should never be allowed to stay. And it would be a sign of weakness capitulation that would also severely harm U.S. companies. Yeah, but the no deal also comes with real costs, right, which were both basic, I mean, just to put it bluntly, if both countries followed up with the maximal version of the threats that they're making, we kind of drive each other into major recessions, no? I mean, the Chinese economy is already not doing well. Ours is somewhat stronger, but the situation, as you just described it to me, is pretty dramatic. So that's the gun. Everyone's pointing at everyone else. And if I could just characterize what seems to me to be your concern briefly, the Trump administration is seeking an economic deal with economic benefits.

The CCP with she chairing is seeking a better strategic. They have economic considerations, but those are nested within a more of a strategic vision that goes beyond economics as the outcome they're seeking. 100%. Yes. And that, I think, gives, depending on how China approaches this, how Xi Jinping approaches this, that can be an advantage. Because the virtue of agreeing to something you don't necessarily intend to comply with, which given how Xi Jinping made promises to Barack Obama in 2015, I promise I won't militarize the South China Sea. We all saw how that worked out. I promise U.S., I promise Chinese entities will stop stealing the intellectual property of U.S. companies. Those hacks tapered off for a while, but then eventually they came back.

So Xi Jinping's promises to American presidents have a way of having an expiration date. But what that promise has historically bought Beijing is time, time to consolidate, time to smuggle and evade export controls, and time to further isolate Taiwan, time to increase their inroads through the Belt and Road into Latin America, the Middle East, and also to sell and further disseminate, diffuse their own AI applications around the world. So, like, this is part, as you say,

of a strategic design where these talks, these negotiations, by time. And you and former Congressman Mike Gallagher wrote a piece a while back that I find myself coming back to over and over again about the Korean War and how the CC, or I guess the Red Army at the time, leveraged talks in the midst of the Korean War, not because they were interested in peace, but because they were losing on the battlefield. And they needed time to regroup and entrench themselves and control the political narrative, which they did to great effect, as you and the former congressman wrote so convinced. convincingly in that, I think it was a foreign affairs piece from both of you. I see that same danger here, or the potential for the same danger. But I will also tell you what gives me optimism is the leverage that Xi Jinping is bringing to the table, it's more than just that rear-ear earth export control.

The other card that he has not played, that he could and would be crippling to Americans, would be to control the export of pharmaceuticals and active pharmaceutical ingredients in particular. They have not played that card yet, but if they do, Americans would have feel the impact of that to the health care that they expect and the medicines that they depend on, and they would feel it quickly. So Xi Jinping has cards to play, but they're so draconian in nature that it would almost certainly have the impact of having a blowback and mobilizing folks over here on our side of the Pacific to do something about it quickly. But if Trump is focused solely on the economic domain or maybe more on that to the expense of others, that gives Xi Jinping room for these kinds of demands. So I have some reason

for optimism because these cards are so deadly that there's probably going to be some blowback, but there would be real harm again. So my hope is that Trump recognizes that this is bigger than just economics. There is a strategic competition and, dare I say, a coal war happening right now. Just to step back from this moment to the broader question of our economic entanglement with China, to what extent are you aware of efforts in this administration or in the Congress right now, for that matter, to smartly decouple or in targeted fashion disentangle ourselves in areas where we're, long past due for doing so. And I just, I mean, this is sort of like a bootless cry of

frustration, but, you know, I, you and I both have been involved in conversations in Washington for what seems to me to be at least a decade now or going up on a decade about, for example, what a travesty it is that the Chinese basically make our medicine for us. And it's a slight exaggeration, but only a slight exaggeration. And this stuff is not, you know, kind of like the rare earths, which the name is misleading. You can. can kind of find them everywhere. It's about the reason we're in the situation we're in is Chinese have just consolidated control of the supply chains to include the refining capacity. Like these pharmaceuticals, we're talking about like the basic sort of, you know,

penicillin equivalent stuff. Like this is not high tech. This is not complicated. They just control the supply chain. They just, they just have consolidated it in China. And so the whole world is dependent on them. And it's not just pharmaceuticals. It's a whole range of other stuff that's really, really important. The rare earths, obviously, which that is the card they're playing right now. Now, how is it that we are sitting here in 2025 where people who who pay attention to this stuff have known that this is a problem for this long? Where we in the, it was in the Trump first term that the national security posture of the United States shifted to one of great power competition and being more serious about China. Something that actually, to their credit, the Biden administration, you know, more or less adopted that frame as they continued to make policy.

How are we still here in 2025? and the Chinese still make our drugs for us. I ask myself these questions every day, and I struggle to find satisfactory answers, but there are answers. I think one answer is the inherency of economic interests that would have great short-term pain from actual true decoupling. You can look at this as something as small as a consumer level

where the cheap prices and the on-time delivery, that we as Americans not only enjoy, but expect. It's because of manufacturing in China. And again, that may not be as critical as pharmaceuticals, but it is a livelihood issue where American families plan their consumption budgets every year around Amazon, actually functioning and working properly. And China is an indelible part of that calculation.

And that might be something that Americans probably don't think about all the time, but it's a reality. actual decoupling, even on issues that's seemingly innocent as textiles, when you have slave labor in China, particularly in Xinjiang with Uyghurs and the genocide there, that goes to your daily pocketbook for what you wear every single day. So, I mean, there's that daily issue. But when it comes to something more advanced, like pharmaceuticals, this is what China has been able to do to great effect. Because keep in mind, the Chinese companies trying to break into these strategic sectors, do not have the pressure of turning a profit and remaining economically viable. This is, again, to further the point that you stressed a few minutes ago, Aaron,

they do not think, meaning they, the Chinese Communist Party, they do not think about economics in the same way that we do. Economics is a tool of strategy. And it's not that Americans don't think that it's not, but we understand economics as this free market, where good faith actors can have a win-win outcome of a supply and a demand and a producer and a consumer. And as long as you have an open market, you can have people who find each other and meet each other's needs at a good price point. That is not the economic model of Beijing.

There's a reason American presidents, Trump included, have been complaining about overproduction and dumping, basically a trade term for forcing, your excess capacity that you produced and you don't have anyone inside your country to buy it. So you just ship it off to other countries like America. And it's cheaper than it is in America. And you drive out our companies here at home in the process. All that to say, there's not a need to remain profitable in China because they will just be saved by the government if it's strategically important for the political purposes of the party. So that's a huge reason. And I guess a corollary to that, we have not been able to find a good defense for it.

The Trump administration, and on this, I think they do deserve great credit. They are starting to find an answer on rare earths. The investment that the Department of War made recently into MP materials, a company that owns a rare earth, I guess for a while it was a defunct rare earth mine in California. but it's, you know, they've brought it back online. The U.S. government is testing a few policies. Number one, they have equity stakes in the company. Number two, they have a price floor set, which means, and they have a guaranteed purchase commitments.

So they're trying to insulate the ability of Chinese companies to run our own companies out of business in the free market. I think, Aaron, it comes down to this. We have, it is really hard for Americans to do industrial policy. because industrial policy is not a free market act of a private actor and a free market economy. We are having to, I think, rejigger our assumptions. You can have free trade with free countries, but with an authoritarian, with an authoritarian country like Chinese Communist Party, you need to adjust your economic moves.

And you have to do it in the confines of an American government that was not designed to do. do these kind of things. So we're testing, we're groping our way through this as best we can. I think that's why. You said earlier that no deal would be better than a bad deal coming out of this meeting. What would a good deal by your lights, by Michael Sobolick's likes, by Michael Sobelich's lights look like, you know, presumably there's an economic element to it. We do, we do want, I actually agree that we are generations into a highly unfair trade relationship with the Chinese, largely as a consequence of Chinese misbehavior and duplicity. So that's part of it. But the point you've been hitting again and again is we should also take a

broader strategic view. What's a good deal look like? A good deal needs to be about more than just trade. If it is confined to the domain of trade, then even if in the short term on paper, China makes promises and commitments that tease up, I think, a repeat of their noncompliance with the phase one agreement of Trump's first term. And again, they buy time strategically and diplomatically. So to me, a good deal means stepping back and asking bigger questions than just how can we get a Leninist regime to treat us fairly. I think a good deal starts with the assumption that a Leninist regime will never treat a free people fairly. With that assumption, you then have different challenges that you need to fix.

And I think a different, maybe a broader understanding of what kind of deal we need comes to light. We need more than just the Chinese Communist Party to treat American companies fairly. We need the Chinese Communist Party to not only stop sending fentanyl precursors to our hemisphere. We need the Chinese Communist Party to back away from its aggressive belligerent designs on Taiwan. We need them to stop leveraging apps like TikTok to weaken our democracy and divide us domestically. We need the Chinese Communist Party to shut down their domestic police stations that they have somehow been able to stand up and operate on American soil in the United States. The laundry list of what we need them to do is more than just economic. They, as a matter of

policy are trying to divide Americans at home and weaken our institutions of government. And if you look at the way, much like the Russians, how they insert themselves into the social media discourse of America, even in the wake of Charlie Kirk's assassination, you see CCP-backed accounts on social media blaming other Americans or in some cases blaming, you know, in very anti-Semitic tropes blaming the other out there for what happened to Charlie Kirk. That is more than just posting for the sake of being a jerk. That is meant to divide us from our allies and it's meant to divide us here at home. So I think we need a broader net assessment of what the CCP is actually doing to America.

And then the deal that we're after, I think to me, means that we force the Chinese Communist Party to focus on their own problems at home instead of creating problems for others abroad. And I suppose, Aaron, that's another way of saying, we're not really in a position to even think about to deal with these guys yet. And because if you want to talk about reciprocity, if they're weakening us politically here at home

for their own strategic designs, a reciprocal response would be doing the exact same thing to them. And I think that's what we, need to start doing. That's what my book that we talked about last year is all about. That's what the blueprint is for it. And until we do that, if we keep thinking too small and go after these tiny subsets of strategy, if we focus just on trade or just on commercial relations or inbound or outbound investment, we miss the broader scope of what they're doing. I'm glad you raised TikTok. That was the last major issue I wanted to talk through with you.

It's been a subject of discussion between the United States and China, and I think between Trump and Xi in recent months. Mike Gallagher, repeat School of War guests, of course, led an effort in the Congress. Was it a year and a half ago now? Time flies. Yeah, a year and a half ago. To effectively ban TikTok if it could not be divested from its Chinese ownership. And there are some other conditions there, which we can get into. You know, the Trump administration sort of flipped from a place where in the past it was more hostile to TikTok to, in this new term, embracing it and looking to keep it functioning on some level.

So they've been delaying the implementation of this law. And the big news in recent months is there does, per the White House, seem to be a deal coming together, which President Trump is going to assert meets the standard of, I guess it's qualified divestiture required by the White House. the law to keep TikTok alive. Tell us a little bit about this deal and tell us whether or not in your view, based on what you understand from the reporting about the deal, it's actually going to satisfy the law. And this, you know, just to, this is sort of a technical, we risk this being sort of a dry conversation. But, you know, TikTok continues to be a really maligned force in our country, aside from just sort of the, sort of the normal toxic social. media sludge, which it sort of takes up to, in this is spinal tap terms, it sort of takes up to

an 11 compared to its peers. I mean, there's demonstrable political interference and efforts to divide out of TikTok a year ago or a year and a half ago when Congress was really focused on this. I remember fascinating statistical documentation that TikTok was meaningfully more anti-Semitic than its peer platforms. Today, I saw a fascinating report from this firm called Sprint. AI that you can demonstrate that TikTok's thumb is heavily on the scales for Mamdani in the New York mayoral election. We typically stay out of domestic politics here on School of War. But suffice to say, I don't think the rise of a Mamdani in American politics is going to lead to the right outcomes on China policy, something that the Chinese surely know.

And also just they sort of like divisiveness for divisiveness's sake. And the report that I saw this morning was that TikTok is essentially in the tank for Mamdani, demonstrably so. So this, like, this is ongoing. Is if this deal goes through, is any of this going to get any better? Yeah. So one caveat and then it's dive in. The caveat up front is we have seen the executive order from the White House.

What nobody has seen is the actual deal. And I'm not sure that we actually ever will because it might be proprietary. So with that caveat, let's talk about what we know from directly from the administration. The executive order that the president has issued and signed, Donald Trump has already made the determination that there has been a qualified divestiture. That has already happened. So at this point, TikTok is operating according to the administration on legal ground. Interestingly, China has still not approved their side of the deal.

We do not know if this is actually going to come to fruition yet, but the administration has already pulled the trigger. The deal itself, there are a few different things legally that any TikTok deal will need to comply with, and we'll talk about why that stuff matters. The first has to do with data sharing under the law that Congress passed last year. There can be no cooperation between U.S. TikTok and BightDance, the Chinese parent company that currently owns TikTok, on the issue of data management of U.S. users. The second thing has to do with the algorithm.

No cooperation on the management and operation of the algorithm. How is this deal structured? This deal is one in which the algorithm is going to be licensed from BightDance to TikTok U.S. Why does that matter? If you, Aaron, or your listeners, are unfortunate enough to have to deal with Microsoft Office, products every single day. I say that as like an, I'm a Apple person for better or worse at this

point, but I like grudgingly have to use Outlook and Word and a few other things too. I do not own Microsoft Office. I have the ability and the privilege to operate the Office suite on my products because I pay for a license to do so. I am not able to manipulate the code for Outlook or Word or Excel. I don't have the ability. or even the know-how to get to the back end of these things, to see the code, to see what they're doing. Now let's talk about this arrangement with TikTok. If the algorithm is licensed from BightDance,

that means that BightDance will still own the algorithm. And if they're still going to own it, that means that BightDance will still be able to control it. And if you look at how the White House has talked about this deal, they talk to great effect about how, how Oracle, the U.S. company that will manage U.S. user data under this arrangement, Oracle will have back-end access because of negotiations to see what the algorithm is doing. That's great until you factor in the reality that there's somewhere of about six billion

lines of code for the TikTok algorithm. And yes, that is billion with a B, six billion lines of code. And I, in my own conversations with actual techies, of which I am not, but in the conversations I've had with techies who are familiar with the TikTok issue, the refrain I've heard that has startled me is that we only understand about what half of those six billion lines of code do. The other three billion remain a mystery. So if we can see the whole thing, but we only understand half of it and we don't actually control it, That is not a qualified divestiture under the law until I get out of the legally speak for a second. It is my current assessment that the Chinese Communist Party will retain control of TikTok under this deal that the White House has blessed, which is terrible. And you mentioned their support from Ondami.

Let's also talk about how TikTok opposed, promoted content that opposed Donald Trump's tariffs against China earlier this year. At the beginning of our conversation, I talked about the four chapters. of the trade war. In Chapter 1, when U.S. and China were having tit for tat escalation battles over tariff rates, TikTok was boosting content from Chinese manufacturers, not only opposing the tariffs, but coaching U.S. users on TikTok how to evade them and buy directly from Chinese suppliers. That's what they have been doing. And we haven't even talked about Osama bin Laden's letter to America and how it went viral on TikTok in 2023 or 2020, 2020, 24. This is an app that is an arm of information warfare.

And this, again, this concerns me. Again, like economics, information warfare are subsets of China's broader campaign of political warfare against the United States. We recently got out of the information warfare game defunding Radio Free Asia, which I'm the first to admit, voice of America. was riddled with problems. But if you throw the baby out with the bathwater and you have no way to fight in the information domain against a Leninist regime inside of its own country while leaving ourselves exposed to

their own campaigns inside of our own country, that is madness. But that is the position that we're in right now. You paint a pretty grim picture. And we should also note, I can't remember if you just did in your spiel, that bite dance Are they going to be the plurality shareholders still? They have to be less than 20% right to satisfy the law. But iterations of this that I've seen reporting on, they remain the largest single shareholder. They do fall below the 20% threshold from what I've heard.

But I have also heard the exact same critique that you just shared. That while they're not below that legal threshold, they remain in like a pluralistic sense. They're the biggest. I have not seen that confirmed, but I have heard that. What I can't understand is, you know, some of the names you see associated with the potential investor group that's coming together for this. And this is all speculative. And I can't confirm any of this.

And this is just what's in the press. But you see, you know, obviously the Ellison family and Oracle. You see Rupert. I've seen Rupert Murdoch's name. You know, you've seen a bunch of serious people, serious business people and investors who I don't know if I would describe, you know, the names that I see as China Hawks per se. But they're serious people and they're serious about America for the most part. What are they going to, if what you say is true, they are going to be presiding as part owners over a system that is going to continue to spit out these terrible outcomes.

I mean, it's still going to be sort of demonstrably poisoning the American information environment. Like what then? Which gives me, gives me some reason to think, well, maybe our account of it is two-dye. And actually there are things behind the scenes that will happen that will give, you know, Americans essentially control of TikTok. Thus, that's reducing it in its billiestness to just the same level of billyousness as, you know, Instagram and the other social media platforms. But, you know, we'll take what we can get here for now. Then again, if that were the case, I feel like, wouldn't the various people involved in the deal just tell us to mollify us? Wouldn't they just illustrate how it's actually all going to be okay?

the word games that administration officials are playing on background with reporters, to me, signal where this is going. In mid to late September, I think it was somewhere around September 25th or so when they were starting to roll out the TikTok deal. I remember this because I was on vacation in Florida sitting by a pool, reading the background briefings, trying to figure out what was going on. they are very carefully avoiding the claim, depending on who they're talking to, they're very careful to avoid the claim that they will actually control the algorithm. I've heard some very senior officials make that case publicly on social media, but when they talk to reporters, the language suddenly changes and becomes more precise over having insight into the algorithm, being able to monitor the algorithm.

What they had not said is control of the algorithm. That, to me, is the concerning data point more than any others. Also, their own admitting that the algorithm will be licensed. That right there is a huge concern. And it's one that Chairman Molinar, the China Select Committee, has also been incredibly vocal about. Michael Soblich of the Hudson Institute, author of Countering China's Great Game, a sobering conversation, but thanks for helping us understand what we might be seeing here in the days ahead. Thanks so much, Aaron. This is a nebulous media production. Find us wherever you get your

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