In short
Gina Raimondo discusses U.S.-Europe tensions and argues Europe’s industrial base is being “crushed” by China’s subsidized, dumped, cheap imports (she cites roughly 20–30% higher year-to-date Chinese imports to Europe). She connects this to economic security, supply-chain resilience, and the need to manage the transition to an AI economy without overregulating AI.
Guest background
Gina Raimondo is a CFR Distinguished Fellow; previously U.S. Commerce Secretary and Governor of Rhode Island.
Key claims
The U.S. and Europe’s “ice” isn’t that thick, but European patience is wearing thin. The biggest mistake in the current U.S. China strategy is “pissing off” allies, making effective pushback harder. The U.S. should not try to make everything domestically; it should diversify critical supply chains with allies. She argues slowing AI via overregulation would be a mistake; instead, government must build transition systems to prevent unemployment-driven instability. She says CHIPS Act investments are mostly surviving because they were bipartisan; goal is ~20% of global leading-edge chip capacity by 2030.
Notable examples
IBM using AI to resolve 94% of HR questions; TSMC making leading-edge chips in Arizona; China’s impact on Germany’s chemicals and autos; concerns about advanced packaging and chemicals/substrates still coming from Asia.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOU.S.-Europe Relations and NATO
2:39 to 5:30
Discussing the current state of U.S.-European relations and NATO's role.
“President Trump, he said to give a speech tonight related to the war in Iran.”
Economic Security Amidst Global Challenges
5:32 to 8:04
Exploring the implications of U.S.-China relations on European industry.
“I mean, if you look at now what China is doing to Europe, it's terrible for Europe.”
The Role of U.S. in European Industry
8:08 to 11:44
Analysis of the U.S. role in supporting European strategic industries.
“So I wish people would talk more about it.”
Political Accountability and Leadership
11:46 to 14:00
Discussion on the responsibilities of politicians in international relations.
“Like, okay, you can be self-destructive because it saves face, but I don't think it's a good idea.”
The Role of Public Service
14:00 to 14:49
Discussion on the responsibilities of public servants versus politicians.
“Be a public servant, not a quote-unquote politician.”
Trade Relations and China
15:19 to 18:59
Exploration of US-China trade relations and its implications for businesses.
“Listen to the new season of The Visibility Gap, a podcast presented by Cigna Healthcare.”
Navigating AI and Economic Transition
18:59 to 22:14
Insights into the challenges and strategies for transitioning to an AI-driven economy.
“It's hard to put that genie back in the bottle.”
Policy and Social Implications of AI
22:14 to 24:29
Discussion on the social and political ramifications of AI and necessary policies.
“Civil unrest, political violence, 15 % unemployment rate, that's not winning the AI race.”
Education and Job Creation in the AI Era
24:29 to 28:00
Addressing the need for new job creation and education reform in an AI-driven world.
“So I think we just have to come together and create different set of incentives.”
Challenges in the American Employment System
28:22 to 29:24
Discussion on the shortcomings of the unemployment system for white-collar workers and the need for transition insurance.
“This was a master's degree in journalism.”
Show all 18 chapters
America's Resilience and AI Transition
29:24 to 30:14
Exploring how America has historically adapted in crises and the potential for proactive changes in response to AI.
“And by the way, we can, America rises to the challenge in times of crisis.”
Entrepreneurial Optimism Around AI
30:14 to 33:13
Insights from small business owners on how AI is positively impacting their productivity and growth.
“crisis and do the change that's necessary now so we can thrive in an AI economy.”
Creating Support Systems for New Business Ventures
33:13 to 34:32
Proposing new initiatives to support laid-off workers in starting their own businesses with financial assistance.
“I think you could see an explosion of new small companies.”
AI's Impact on the Semiconductor Industry
36:17 to 38:43
Discussion on the intersection of AI and semiconductor industry policies, particularly regarding chip controls.
“See complete disclosures at public.com slash disclosures.”
Bipartisan Success and Lessons from the CHIPS Act
38:43 to 42:09
Reflecting on the bipartisan nature of the CHIPS Act and the importance of political support for long-term industrial policies.
“So, like I say, throwing sand in the gears of China's operation felt like a good thing to me.”
Evaluating the Success of the CHIPS Act
42:09 to 43:16
Learn about the strategies and challenges in achieving self-sufficiency in chip production.
“That was immediately undone because it was passed on partisan lines.”
Challenges in Advanced Chip Manufacturing
43:16 to 44:48
Understand the complexities of chip packaging and the importance of local manufacturing.
“I'm not sure that's the right word, but self-sufficient in its supply of chips?”
Balancing Global Trade Relationships
44:48 to 49:48
Explore the need for practical partnerships in global trade amidst geopolitical tensions.
“No, because he's like, I don't like that.”
Transcript
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1:55Hello and welcome to a live episode of the Odd Lots podcast. I'm Joe Weisenthal. And I'm Tracy Alloway. So for, I guess for listeners who are hearing this here at CFR, I need to talk about truly do have the perfect guest with us. We're going to be speaking with CFR Distinguished Fellow, Gina Raimondo, previously the Commerce Secretary, previously Governor of Rhode Island. So, Gina, looking forward to chatting.
2:21Gina Raimondo:Me too. Thank you for having me. There's so much to talk about. By the way, what's the date today? It's April 1st. We always make a note of that these days. You better add in the time. Yeah. What time? 11.45. Because so much is liable to change by the time other people hear this episode. But I want to start. I saw a headline this morning. President Trump, he said to give a speech tonight related to the war in Iran. And according to a report, I think it was a Reuters report, he's going to criticize NATO heavily. They haven't gotten involved in the war, et cetera, maybe threatened to pull out of NATO yet again.
2:58And I'm curious from your perspective, you know, how thick is the ice right now between the U.S. and Europe? And how much more is there for it to thin?
3:09Gina Raimondo:Yes, such a good question. It does make sense. Hello, everybody. It's great to be here. It's great to be on the show. I don't think it's that thick. The last time I was in Europe was, I guess, a month and a half ago for the Munich Security Conference and spent a lot of time with European ministers, military leaders, CEOs. And I think their patience is wearing thin with us, and somewhat justifiably. So I don't think it's very thick. Listen, I understand the president's point. if he thinks European countries aren't pulling their weight or doing their fair share as it relates to investing in their military capacity and participating in NATO.
3:48Gina Raimondo:That being said, I mean, it's not clear to me that before we invaded, we had a strategic plan with our European allies to get involved. And so, you know, it's like a lot of things with this administration, maybe not a terrible idea, but very poor execution. So I know when you were Commerce Secretary, you obviously spent a lot of your time thinking about the U.S. versus China technology situation. And I know you argued also that we actually need Europe when we think about that, because if we're going to have something like export controls in the U.S., it doesn't really work if Europe doesn't come along with us.
4:28When you think about economic security in the context of, let's just say, fraying U.S.-European relations, Where are we headed? I think we're in a bad place.
4:39Gina Raimondo:I don't think we can effectively compete with China, economically, technologically, without allies. They're just too big. They're too big, they're too determined. And so we need allies, including Europe. By the way, including Southeast Asia. Including the global south. And so if you were to say to me, hey, what do you think is the biggest mistake about how this administration is handling China and their China strategy? I would say pissing off all our allies. It's just not a good idea. By the way, it's not good for Europe. You know, when I was in Europe in Munich, what I would say to the Europeans is, I know you're unhappy with us, but we're your closest ally, and it isn't good for you to cozy up to China.
5:34I mean, if you look at now what China is doing to Europe,
5:39Gina Raimondo:it's terrible for Europe. The Chinese imports to Europe have surged. I can't remember the exact number, but it's like 20, 30 % more imports from China to Europe this year, year to date versus last year. the german industrial base is going to get crushed like this is china's play they run the play over and over again they subsidize they dump cheap products into the global market in this case europe also africa distort the price and it makes it impossible to compete so that's bad for america it weakens our allies in europe by the way it's bad for europe and that's why the ice is thinning But, you know, my point to Europe is, okay, your feelings are hurt, but China's not your friend.
6:29Yeah, let's talk about this a little bit more because this phenomenon is like, all right, Germany has an incredible history of chemical giants and automotive giants, obviously, and so forth. And there's a lot that gets talked about in the U.S.-Europe relationship these days, primarily centered on defense and NATO spending, etc. etc. But it does feel to me like there is comparably less attention paid to just what is industrial Europe even going to be in the future? Because they don't have our tech, right? They don't have our metas and alphabets and open AIs to the same degree.
7:05Gina Raimondo:I could not agree more. I was the Commerce Secretary, so my focus is economic security, economic alliances, technology security. So again, I personally think a weak European economy and a weak European technology sector is definitely bad for them, but also bad for us. We want strong allies. And so when I was in Munich, while the talk was, of course, around NATO and their military capacity, every speech I gave a person I spoke with, I talked about their supply chains, their industrial base, the fact that it'll be almost impossible for them to compete if China continues to, like I said, distort the global market and take advantage of them.
7:56And particularly Germany,
7:59Gina Raimondo:you talk about the chemical companies and the auto companies, the damage China is doing right now for their industrial base is significant. So I wish people would talk more about it. Of course, all the focus is on NATO. It's a shiny object. Everyone's focused on the military, which is very important. But, you know, it's just like supply chain in America. It's like the frog's boiled and doesn't know it. For decades, we allowed our supply chains to wither and atrophy. And then you wake up 20, 30 years later and you're massively reliant on China. So let's wake up today and do something about it. Yeah, the European situation, I mean, it does come up depending on what the talking point du jour is.
8:43So if it's AI, people are like, well, Europe is behind in AI. And then I was reading a note just yesterday from credit sites talking about petrochemicals and saying, well, Europe is in a really bad place when it comes to petrochemicals, US a little bit more insulated and China is basically almost like 100 % self-reliant for some things, which is pretty amazing if you think back to the situation just 20 or 30 years ago. When it comes to building up European strategic industry, let's say, or technology, what role do you see for the U.S. in that? Because it feels like everyone's trying to do the same thing at the same time.
9:21The U.S. is trying to develop its own ecosystem of either industry or strategic technology. China is trying to do it. Europe maybe should be trying to do it. But How is everyone doing it at the same time, and what should the U.S. actually be advocating for here? We should be working with our allies to shore up all of these supply chains. Listen, I don't think America needs to be, can be, or should try to be mining everything, making everything that we need.
9:55Gina Raimondo:Japan is a juggernaut in chemicals. That's okay. They're one of our closest allies. Europe has had a long, successful industrial base. So as long as we have some diversification, that's a good thing. And as long as we're working with allies and have allies, that's a good thing. The scary things are when we are overly dependent on one country, especially if the country is China. like I personally think it is bad for America and the world and Europe that they have such an anemic technology ecosystem and that you know there's a lot of reasons they have that it's over regulated they don't have a capital market they this you know I thought the Draghi report kind of was excellent laid it out and they need to act on it but my point is you know why can't we work more closely with Europe to shore up our supply chain good for them good for us By the way, the Philippines has nickel.
10:55Gina Raimondo:Indonesia has critical minerals. You know, there's some things we do need to work with allies, and China is all over those countries. I think the most frustrating thing I hear, and it's a political argument, and I'm a politician or former politician, and it drives me bananas. When I have quiet meetings with very senior people in Europe, ministers, prime ministers, CEOs, I say to them, you're cozying up with China because you're mad with how Trump's behaving. Okay, I understand why you'd be mad. cozying up with China is bad for you. Arguably, it's worse for you than us. Why are you doing that? And they would say, well, we feel like we have to, but you pushed us into that corner, which is things politicians say.
11:48Gina Raimondo:Like, okay, you can be self-destructive because it saves face, but I don't think it's a good idea. I feel like there's one thing I have to push back on there. As a former European capital markets correspondent, Europe does have capital markets. They're just not as robust. as some of this, for sure. They're not deep. They're not dynamic. I just don't want to get angry emails from my former contacts going like that. Not at me, not you. But how much of it is sort of classic politics? The people who you're talking to, they have to get re-elected. And there's one guy on their TVs who continues to insult them frequently and instigate and etc.
12:33And that's Trump. And there's someone else who, as far as I know, never publicly says anything negative about Europe. And that's Xi Jinping. Like, they have to get elected, right? And so you could say logically, look, it doesn't long term, maybe the U.S.-Europe relationship will change and so forth. But, like, there were politicians like you once were.
12:53Gina Raimondo:Yeah, yeah, yeah. So I hear that. I do hear that. And that's why I said, I think probably the biggest mistake of the current administration's China strategy is hurting our relationship with allies. I don't see a path to pushing back on China effectively unless we work with our allies. So I do. I hear you. I guess now everyone can laugh at me. I guess I still hold, you know, politicians to a higher standard. I mean, their job isn't actually to get reelected. Their job is to do the job and serve the people that elected them. And when I even, you know, when I was secretary, I would frequently talk to members of Congress who would say, I know you might be right, but I can't be with you.
13:49Gina Raimondo:I'll lose a primary. and having been on the ballot and stood for election many times and had brutal primaries, my reply is always, isn't that a badge of honor? Go down doing the right thing. Be a public servant, not a quote-unquote politician. But I hear it's a lot of traditional what politics is.
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15:59Thank you.
16:19slash market.
16:39Setting politics aside for a second, because I imagine it's going to recur in this conversation. When you talk to businesses, so executives, I mean, a lot of them still see China as the second biggest economy in the world, which it is, and this huge destination market. And even now when it comes to maybe more sensitive technologies like AI, we are seeing people, for instance, a lot of big businesses in the U.S. opt to use something like Quen, the Chinese open source model. How do you talk to executives who are maybe worried about their share price, worried about the bottom line, and tell them, like, well, wait a second, maybe there are other reasons not to engage with China in this way?
17:21Gina Raimondo:Yeah. Look, I actually, I mean, again, I think trade with China is a good thing. I think trade is a good thing. It creates jobs in America. It allows our companies to compete. I think our trading relationship with China is, you know, it's hundreds of billions of dollars. The vast majority of that is in products that have nothing to do with national security. In fact, when I was secretary, to make this point that trade is a good thing, I started an export promotion initiative for health and beauty products. Like my theory was no one could say lipstick, perfume, blush, eyeliner is a national security issue.
18:07Gina Raimondo:If we sell more of our stuff to China, it makes great jobs in America. And also I do think engagement, commercial engagement, diplomatic engagement does reduce the probability of conflict. So I'm for all that. the challenge is in like selling our most sophisticated leading edge chips to China or certain AI or hypersonics like when you get into that well then then that's a very different thing but by the way that is a tiny as far as I'm concerned the more stuff American companies can sell to China that doesn't hurt our national security interest is a good thing I want American companies to be, you know, profitable and successful.
18:51Right. But if you have large corporations in the U.S. who are using an open source model developed in China like Quinn, is that something that would concern you? I mean, it's open source.
19:02Gina Raimondo:It is, as you say, it's open source. It's hard to put that genie back in the bottle. And so I'm not sure exactly. I think that's less concerning as long as there are other controls. These companies have to have their own data controls, privacy controls, cyber controls, etc. Let's talk about AI a little bit more because you've been writing about it. You've been talking to people about it. What are you working on? What have you been working on? What have you been up to? I'm remarkably busy for someone who doesn't have a single job. Well, since Mike Froman, who runs the council, is there, I'll say I spend a lot of time helping the Council on Farm Relations.
19:47Gina Raimondo:Actually, in all seriousness, we put out a report that I'm proud of as it relates to economic security, and it had to do with AI. And the whole point of it, I strongly believe, trying to slow China down is a fool's errand. Let's invest and beat them by innovating faster in core technologies like AI, quantum, and biotech. The thing I'm spending the most time on is the issue of how do we get through the transition to an AI economy? And I want to talk for just a second on this. I appreciate you asking. So here's how I see it. And maybe your listeners will push back or like it. Right now, most Americans, when they hear AI, they get afraid.
20:38Right?
20:38Gina Raimondo:The vast, vast majority of Americans, AI equals anxiety. I'm going to lose my job. I get that. People are scared. I think it would be a huge mistake to retard our AI progress with overregulation. We just talked about China. I want to win the AI race. I want America to lead the AI world. And I think when we get to the fifth or sixth inning of this AI revolution, whatever you want to call it, I firmly believe there will be more jobs. I do. I think there'll be new industries, new companies, new products and services. I'm an optimist. I am pretty worried about getting from the first inning to that inning.
21:23Gina Raimondo:So what I am spending my time on is how do we create support systems, transition systems, incentives for companies not to just do these big rifts? because here's my view. Yes, we want to win the AI race. Yes, we want to be the leader in the world on AI. We will not do that. Even if all we have is the best models, the best chips, the biggest data centers, but sky-high unemployment and no transition system, that's not winning. That's automating America's decline. So as much effort as we're putting into winning the chip AI and data center race, we better putting that same amount of urgency, effort, and innovation into coming up with systems to cushion us through the transition.
22:19Gina Raimondo:Otherwise, we won't win. We won't win. Civil unrest, political violence, 15 % unemployment rate, that's not winning the AI race. And so let's get practical. What are the new policies and new systems and new training and new incentives for companies to get us there so we can win? I know you're thinking about this now, but do you have any idea of what that could actually look like? Because I think I don't often sympathize that much with large tech companies, but, you know, if I'm... Neither do I. Right. If I'm like a meta or a Google or whoever, and I'm being told that like not only am I in an existential race with every other tech company out there to win on AI, but I am also in an existential tech race with China on behalf of the US.
23:04and also I now have to think about the social implications of what I'm doing and maybe I have to think about ways to either you know slow it down or manage it in a better way for society that's a lot to put on a private company yeah by the way I don't think it should just be put on
23:21Gina Raimondo:them in no way am I saying by the way I mean I'm not sure why we would blame them I mean if they create a new technology and every company in America adopts it who do you who do you quote unquote blame. I wouldn't put it in terms of blame. Like, I love it that American companies are winning the race, are leading. We have that. We do. We do. We design the best chips. We have the best models. That's a great thing. I just think this is a all hands on deck moment for the government at the state, federal and local level, for every company in America, for policymakers, for AI companies to say, what does it really mean to win the AI race?
Read the full transcript
24:07Gina Raimondo:Because I don't, I mean, winning isn't just innovating the technology at breakneck speed. If you create, you know, incredible social, political, and economic unrest, you know, like agents don't buy things, right? Every company needs human beings with money in their pocket to buy things. This is in their interest too. So I think we just have to come together and create different set of incentives. I don't even, right now, you may not agree with me, if you're the CEO of an American company and you fire however many thousand people, it's a little hard to blame them because every incentive in our system says your job is to maximize short-term share price.
24:58Gina Raimondo:So I I think it's time to experiment with some new policies that align incentives to win. I also think this, and this is my view, I think China, you know, with climate, with a lot of things, with, say, pulling hundreds of millions of people out of poverty, China said industrialize, create the pollution, we'll clean up the mess later. They could be doing that with AI. That doesn't work in America. In a democratic society, putting tens of millions of Americans out of work precipitously will create the end of democracy, will not win the AI race. And so we just got to get to work and be innovative.
25:46You know, these comments that you make about potential civil unrest, 15 % unemployment, end of democracy, it strikes me that the only people, other people that I hear really talking about this seriously are the heads of the major AI labs themselves who seem very attuned to this risk. Like setting aside European politicians, setting aside politicians, like just domestic American politicians, do you think they're sufficiently homed in on the risks that you're thinking about right now about the potential for domestic destabilization as a result of AI in a fairly short period of time? I do, but I think they're overcome with
26:29Gina Raimondo:and seized by anxiety and fear and not sufficiently seized by, okay, what are we going to do about it? Yeah, I mean, look, I talk to a lot. I know most of the governors, having been a governor, and on both sides of the aisle, what do they hear from their constituents? Fear, anti-data center. It manifests itself in the anti-data center stuff, and that obviously has taken off, but what you've been talking about is, like, that's not going to cut it. Yeah, I agree. So what should they be doing? the question everyone says is, okay, what are the new jobs? Right. Yeah. The only people who know the answers to that, to the extent anyone does, are companies that are using the AI to grow, and AI companies, you know, regular companies, and AI companies that are developing the new stuff.
27:23Gina Raimondo:So the number one thing is, how do we incentivize them to really lean in to start investing some of the gains that they make from AI and efficiency into new job creation. Right now, and my view for a long time has been, post high school education in America mostly doesn't work. It mostly doesn't work. You can argue with me about it. That's my long held view. I was a governor who oversaw colleges. A lot of people who start college don't finish. They wind up with a degree, a bundle of loans and then become a barista or something like that. I became a podcaster. You became, well, you know, you couldn't get a job at Starbucks.
28:06Gina Raimondo:People think I'm joking. I dropped out of Columbia. I don't think I've ever said that publicly. Oh, really? Yeah. After two weeks, I was like, I can't believe I'm spending this much money. And that was wise. And I left. You see, you're smart. That's it. You're smart. But anyway, so what's my point? Like, let's go. Columbia journalism school. You got your undergrad. Yeah, I did undergrad. Yeah, that's what I'm saying. You did. You're completed. I just don't. This was a master's degree in journalism. of like, okay, you like have a regular degree. Thank you for the fact. But by the way, who cares if she didn't?
28:35Gina Raimondo:No, no, no. It's great. I just want to, you know, job. So I think, you know, we have, we have so many systems in this country that were just created for a different time. Like truthfully, I'm excited about the potential of AI and how productive and healthy we could be using it. The thing that scares the out of me is the systems in America that are unemployment insurance doesn't really help white collar worker. If you make, you know, six figures a year, unemployment insurance is not that helpful. We have really no what I would call transition insurance to get from one subsidy or something, wage subsidy to get from one job to another.
29:23Gina Raimondo:adult education is essentially either non-existent poor quality or stigmatized companies have precious little incentive to redeploy people instead of just laying them off so i'm highly interested to work at the state and local level where things can happen with employers who i would argue have the most to gain and governments to get to the business of trying new things. And by the way, we can, America rises to the challenge in times of crisis. Why do we have unemployment insurance? Because we had the Great Depression. Why do we have the GI bill? Because we had a second world war and we wanted to shove everybody to college.
30:08Gina Raimondo:And it worked. Ten times as many people go to college today than they did then. Let's get ahead of this crisis and do the change that's necessary now so we can thrive in an AI economy. when you talk to businesses or particularly local businesses or small businesses when you're doing your work like at the state level etc we know the polls about ai and they're as you mentioned they're very dismal but like do you are there entrepreneurs other people who are not at ai companies who are like right now today very excited about what ai can do for them say that at the non-ai labs like just the companies that are like using ai tools when you go around yeah Big or small.
30:50Do you encounter a fair number of managers, CEOs, small business owners who are excited about what they're able to do now with the technology?
30:58Gina Raimondo:Yes. Yes, I do. I'm spending some time working with the former governor of Indiana, Eric Holcomb, on this issue. And he and I worked together when we were governors. So anyway, last week we spent some time in Indiana talking to people. He organized a couple of roundtables to talk to people. It was amazing to me. They were mostly small business owners, okay? It was incredible to me how, hear how optimistic they were. You know, I'm using AI and I've doubled my business. I'm able to be so much more productive. A woman providing healthcare consulting services said, I'm able to serve a lot more customers and I haven't raised the price.
31:41Gina Raimondo:Big company CEOs who I also talked to. Interestingly, big company CEOs are not as convinced as the AI company CEOs that they're going to be laying off huge portions of their workforce. They think it takes time. Big enterprises don't move on a dime. And when a lot of CEOs I talk to say, yeah, we're going to cut. We're going to cut over here because we want to grow over here. That, I think, could happen. We're going to cut here to grow here. So it's a mix. It's a mix. No one knows. I think anyone who tells you they know is either delusional or lying or something in the middle. Yeah. Nor do I know, okay?
32:30Gina Raimondo:But what I do know is we're not going to solve the problem by admiring it and being afraid. We're not going to solve the problem by stopping AI innovation. We're sure as hell not going to stop the problem by paying every American to stay home and not work. We're not going to solve the problem by giving business a free ride. Like, get in the boat and let's go and fix it. Yeah, we have been asking everyone on the show who says that new jobs are going to be created as a result of AI, what those jobs would actually look like. And you're absolutely right. No one seems to know at the moment. So I won't ask you that question because you already said that you don't have.
33:06Gina Raimondo:I have one little theory. Okay, go on. I do have one theory, which, again, I'll also say I don't know, but I have a theory. I think you could see an explosion of new small companies. And I'm hearing that from a lot of people. It's much easier to start your own business because of AI tools. Yeah. So, like, now lots and lots of people make the living with a restaurant or a coffee shop or whatever. I think it's possible we see a real explosion of online, like new services, new online products, because people can start a business with AI. So let's say I'm right. Like, let's say we do the work and this turns out to be a decent theory.
33:56Gina Raimondo:Okay, so then what do we do about it? How about we create an initiative at a state or local level where we say, hey, if you're a call center worker, you're an accountant, you're going to get laid off. Here's a new initiative. We're going to allow you to collect unemployment insurance while you start your new business. Plus, we're going to give you a subsidy to help start that business. Plus, the company you just got laid off from is going to kick in, I don't know what, a little bit more of a severance, help you to start your job. Like, we have to get from here to there. And we have to start experimenting with some new stuff.
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36:39Not noise, proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Since we're on the topic of AI, and since you are the former Commerce Secretary, and you instituted a lot of the chips controls that Joe and I spent many years talking about. Trying to understand. Yeah. I'm really curious, but when you were instituting those controls, did you have AI coming down the line so quickly in your mind, or were you thinking about AGI? With the benefit of hindsight, were you right? oh yeah yeah yeah um i mean define right like i think we were like more right than wrong in the world of non-perfection i did now you can choose to believe that or not but i don't know if
37:33Gina Raimondo:any of my former team is here a lot of people would say a lot of people would say to me hey hey, Secretary, you're shoveling tens of billions of dollars of taxpayer money into the chip industry. The chip industry is famously cyclical. Are you worried that right when you put this money in, there's going to be a down cycle in the chip industry? And I would say then, I don't think so because of AI. Now, I would say, years ago, I would say at that time, different now, I'd say, you know, only about a third of American businesses at that time were even in the cloud. You know? Yeah. They're still, like, using Excel and on-prem storage.
38:27Gina Raimondo:Saying, so we need a lot of chips for traditional data centers. And I say, and then on top of that, AI. So I always felt that the bottom wasn't going to fall out of the chip industry because of AI. On the controls, yeah, I had a thought that the AI race would be the race, and I wanted to win it. So, like I say, throwing sand in the gears of China's operation felt like a good thing to me. It's pretty incredible on the cloud thing you mentioned. We did an episode recently, and we were talking to an executive, and you mentioned something about the length of time of a recent cloud migration project they were doing.
39:07And in my head, I was like, it's 2026, and large companies still have. We just sort of take it for granted that everything is going to be in some cloud, AWS, whatever. That was Marco Argenti. Yeah, right, right. South of Goldman. Yeah, and so to this day, there's still huge cloud migration projects that are happening.
39:26Gina Raimondo:Which is why I'm not certain we're going to see this 50 million people laid off tomorrow. Yeah, that's a good indicator of how slow these things can move. Pick your big favorite big company. Turning those companies is a little bit like government. You can't turn on a dime. If you have companies that are moving from Excel and all these different databases to a fully agentic system, it takes years, not months, which means we have a minute to figure it out. Now, say, Gina, what are you most worried about? I'm most worried that we do what we've often done, which is wait for the crisis before we have some solution.
40:13Gina Raimondo:Wait for mass unemployment before we get serious about preparing. And, well, you know what I think. If that happens, I think there will be regulation to stop AI, and I think it will be bad. Let's actually talk a little bit more about the CHIPS Act since we have you here. One of the concerns, it's like, okay, people would say this is a type of industrial policy that we haven't done in a while in the United States. And one of the questions is whether our political system allows for that because we had an election and the incumbent party lost and then new people came in, etc. Where do sort of like looking back now, those chips investments that were made, can we say they survived the transition?
41:01and how did the transition affect the trajectory of this broader endeavor to have more domestic semiconductor manufacturing?
41:11Gina Raimondo:Yeah. My biggest lesson from the CHIPS program is when you do something like that, make sure it's bipartisan. It has mostly survived, actually. Now, TSMC is making leading-edge chips in Arizona, the same way they are in Taipei, Taiwan, and they're going to expand. And this administration is like helping, not hurting that. The same thing with Intel and all these other companies. So it is surviving. And I think it's because it was bipartisan. There were a lot of leading Republican senators who really wanted it to happen. And I'm in contrast to say like the Inflation Reduction Act, which you could argue was also a little bit of industrial policy insofar as it was meant to accelerate our path to a cleaner economy.
42:12Gina Raimondo:That was immediately undone because it was passed on partisan lines. Meanwhile, we couldn't have gotten it done otherwise, so in no way am I criticizing. I'm just saying I learned the reality that if we have any hope of having continuity, it better be bipartisanly popular beginning, middle, and end. And my team, to whom I give great credit, pushed me to spend a lot of time on Capitol Hill, even after we got the money, to constantly update Republican members of the Congress to maintain its popularity. And I think that I learned a big lesson with that. How should we evaluate the success of the CHIPS Act?
42:54Because the headlines nowadays are all about Iran and the closure of the Strait of Hormuz. And everyone's minds are currently very focused on choke points in the world. And one of those major choke points would be if anything were to happen between China and Taiwan. And so I'm very curious, if we had a situation like that, would the U.S. be self-sufficient? I'm not sure that's the right word, but self-sufficient in its supply of chips? What should we be aiming for here if we're thinking about global choke points for strategic tech?
43:26Gina Raimondo:This is the question. When you say, did you get it right? I'm like, directionally, yes. Perfectly, no. The answer is no. This is not going to happen. But if theoretically, possibly next year, China has Taiwan and they cut off supply of our chips, I don't think either of those things would happen. but theoretically it would be like apocalyptically bad, right? Like that would be very bad. We're producing some chips in the U.S. Our goal was to get from 0 % of leading-edge chips in the U.S. to I think 20 % of global capacity by 2030. We're on path to hit that goal. But again, 20%. So that's why, number one, I think we need to de-escalate, have stability and a floor under our relationship with China.
44:17Gina Raimondo:It's good for them. It's good for us. But also we have to work with our allies. We cannot, it is not possible. One of the arguments I used to get into with my old boss, President Biden, called me Gov. He's like, Gov, why can't we make everything in America? Like the president cannot. We don't have enough people. That's inflationary. We don't have enough. It's not a good goal. We don't have enough land. We don't of energy. We should make the most critical things and work with our allies. And I had that argument with him maybe 10 times. I lost every time. No, because he's like, I don't like that.
44:53Gina Raimondo:I want to make everything in America. But this gets to my point, like, not to alarm you further, but, okay, let's say we did great with the Chips Act. We're on our path. We're making memory chips here, everything here. We still don't really do what's called advanced packaging. Yeah. They leave, right? We make the chips and then they head out. Yeah. Not to be too much of a nerd here, but... No, this is important. Packages... You know, and by the way, packaging isn't put the chips in a box. Packaging is how they layer the chips, which is incredibly sophisticated to get enough compute on a chip. Even though we're making them in Arizona, they go back to Taiwan for packaging.
45:36problem.
45:38Gina Raimondo:Gotta get that in America. I think it's 30 % of printed circuit boards we import from China. Almost all of the chemicals, substrates, inputs that go into making chips come from China or Asia. If you did like a supply chain breakdown of an AI data center, you know, the cables, the wires, the chemicals, the this, the that, I think you'd be not happy with how much of that still comes from China. So, okay, so what do you do about it? Diversify sufficiently, diversify sufficiently here and with allies so that China doesn't have so much leverage over us. That is the thing. We did an episode, I think, late last year, Mike Froman, who is in the audience.
46:32And we chatted with him. And I don't think he expected us to turn the title. He had one sentence that then we used as clickbait and turned it into the title. But he described the emerging polyamorous global trading order. And I thought that was a very compelling word to describe all sorts of on-the-fly different arrangements. When you think about where we should be going in the future, like assuming this administration will continue to antagonize allies, should the goal really be to just like build some clean blocks again, build some clear blocks, not polyamorous trading, but rebuild sort of unambiguous partnerships with clear lines and clear borders?
47:17Gina Raimondo:I don't want to disagree with Mike, but. I'm not saying he was advocating that. I think he was describing the direction that things seem to be going. What would the opposite of polyamory be? Well, monogamous? Yeah. No, not monogamous, except in marriage. I'm not for that in this example. But in case my husband's listening, I'm strongly for monogamy in other parts of life. I think it's more like we need to be more practical and get along insofar as we can keep commerce going, avoid kinetic conflict, and have a measure of national security. So, for instance, as secretary, I frequently advocated within our team a closer relationship with Indonesia and the Philippines for nickel or other countries with cobalt, etc.
48:23Gina Raimondo:and was frequently pushed back on that, you know, those countries don't hew to our labor standards. They don't hew to our environmental standards. They're in China's backyard. True, but we don't live like the world of love is different. Rationality can maybe go out the window. This is the real world here. I would rather have a relationship. like it's it's you have to balance you have to balance this question balance and practicality fine you don't want to work with indonesia because you don't like that i hear that i hear that is it better to buy everything from china i don't think so so true we i think we have to kiss and make up with europe it's in our interest yes we we have stronger relationships with countries that share our values, that are democracies, that have a rule of law.
49:24Gina Raimondo:I don't think in my lifetime we're ever going to have a close relationship with China, Russia, and North Korea, and we should call it as it is. I think we have to work a hell of a lot harder to increase our economic ties with Southeast Asia, with countries in Africa, with countries in Latin America, and be, you know maybe not we don't have to love them we got to work with them because it's in our interest and it's in the world's interest to de-escalate you know rimanda thank you so much that was a that was fantastic thank you
50:13all right shall we leave it there Let's leave it there. This has been another episode of the All Thoughts Podcast. I'm Tracy Allaway. You can follow me at Tracy Allaway. And I'm Jill Weisenthal. You can follow me at The Stalwart. Follow our guest, Gina Raimondo at Gina Raimondo. Follow our producers, Carmen Rodriguez at CarmenArmond, Dashiell Bennett at Dashbot, and Kilbrooks at Kilbrooks. And a big thank you to CFR. And for more All Thoughts content, go to Bloomberg.com slash All Thoughts. We have a daily newsletter and all of our episodes. You can chat about all these topics 24-7 in our Discord, discord.gg slash All Thoughts.
50:45And if you enjoy Odd Lots, if you like it when we do live events, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.
51:15Thank you.
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From the publisher
The relationship between the US and Europe is deteriorating along both security and economic dimensions. The Trump administration has imposed tariffs, while also being sharply critical of NATO allies. So what are European leaders to do? Hope things go back to normal in the US? Or perhaps become closer with China? Our guest on this episode says the latter would be a grave mistake. This episode was recorded live on April 1 at the DC headquarters of the Council on Foreign Relations. We spoke with Gina Raimondo, now a CFR Distinguished Fellow, who previously served as the commerce secretary in the Biden Administration, and prior to that was the governor of Rhode Island. She discusses her view that European industry is being hollowed out by China, and that the only path forward is a global, unified, non-China trading bloc, which is an idea that's being thwarted by the Trump administration. We also talk about the legacy of the CHIPS Act, and her fears about AI creating mass unemployment and destabilizing our democracy.
Read more:
US Lawmakers Propose Crackdown on Chip Tool Sales to China
Cheap Chinese Cars Are Waiting on Detroit's Doorstep
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