How Taiwan Became the World's Most Perilous Geopolitical Chokepoint

20:43But these two parties have very different points of view. And one of the points I make in the book is we need to learn to handle Taiwan's domestic politics. We are two democracies that respond to one another. For example, I think the KMT, if they come back to power, will be much less interested in helping America reshore chip production. And they're also probably much less interested in doing military cooperation with the United States if that's going to inflame China. I think basically you can think about it this way. The DPP believes that the relationship with the United States is the most important thing, that we matter to them just as they matter to us, and that if Taiwan gets in trouble, America will come.

21:24And the KMT views are diverse, but they tend to have the view, the cavalry might not be coming. The Americans might be using us as a pawn in a bigger geopolitical game, but can we really trust them? And we don't want to become Ukraine. So maybe the best approach is to negotiate. And these are two very different points of view. They're both plausible interpretations of the facts. And the United States has to learn to deal with both sides. I want to ask you more about reshoring, but since we're on the topic of domestic Taiwanese politics, One thing I've always wondered, and I'm curious if you maybe got some color on this in the course of your research, but one of the reasons, it's not the only reason, but a big one.

22:05One of the reasons Taiwan is strategically important is because of the semiconductor business and the presence of TSMC and companies like that. What role does a TMC play in Taiwanese domestic politics? Are there actual instances of semiconductor companies having a seat at the table when it comes to formulating national security policy or indirect influence or anything like that? Have you seen examples? It's hugely, hugely important. It's only a couple of percent. The semiconductor industry, depending on how you define it, with related services industries, it's something like 5 % of employment in Taiwan.

22:39But it's an outsized share of Taiwan's exports. And right now, just as you look at the macro data, Taiwan's exports are booming because no one can get enough of their chips. There is an entire ecosystem of universities, vocational training centers, companies that supply to TSMC. This is a national champion in so many ways. And they get tax benefits and subsidized land. And Taiwan's political economy is organized around making them a success, just as South Korea's has been organized around making Samsung and others a success. TSMC is smart enough to know that it has to deal with administrations of both parties.

23:18But TSMC is also caught in a U.S.-China tension, too. And TSMC doesn't share the United States political objectives here. TSMC is happy to sell to China. They don't have a problem if China buys lots of their chips. But they have to work with the United States because ultimately they're fabricating chips at the high end that are made with U.S. designs. So the U.S. does have the ability to export control where those final products go.

23:43Tracy Alloway:This is really interesting and important. And I hadn't thought about this dynamic. I mean, I guess it sort of makes sense to me that like if I were like the leadership in Taiwan, I don't know if I would be like that thrilled about our main company opening up fabs in Arizona, etc. But I guess it sort of makes sense. Like, OK, you know, we the U.S. is a pretty important partner. But what I'm wondering, you know, like in a future scenario, so going back to Reagan and it's like this doctrine, we're never going to put pressure on you to like accept a bad deal. What if over time organically a new generation of sort of more sympathetic, like mainland voters, like they grow up, they look at the world, they see maybe the U.S.

24:31Tracy Alloway:sort of looks like a belligerent power sometimes, etc. They look at China and it seems, well, it looks like they're doing a lot better. They're not as poor as they used to be. They look pretty stable, etc. Like, could Taiwan just sort of migrate closer to the Chinese sphere or perhaps even merge back into China organically? Yes. And is that something that, like, U.S. policy, like, do we feel that we have to prevent that if that's sort of where the democratic action in Taiwan goes? Well, our longstanding policy is that it's the right of the people of Taiwan to decide their own future. And that's a principled position that we hold for a reason that is also self-interested, which is if Taiwan decides that they want to submit or they want to take a deal and they want to unify with the mainland.

25:19By the way, the mainland uses this term reunification. That's a weasel word. Taiwan has never been subject to the People's Republic of China in its history. But if Taiwan becomes unified as part of China, what's the United States going to go in? We're going to go in and topple the government? We're going to tell them no? They should have self-determination to decide. And that is one reason why it's a no-brainer to start to build a semiconductor manufacturing base in the United States and Japan and other allied countries. Because there's any number of reasons to doubt whether we have assured access in the long term to Taiwan's chip supply.

25:56And if this is the most essential bottleneck to the development of frontier AI, then we cannot put all of our eggs in that basket.

26:04Tracy Alloway:Do we know, like, younger Taiwan? Is there a reason to think that, like, I don't know, I have, again, I haven't looked at polling of, like, how Chinese voters under 25 years. The younger Taiwanese. What do we know about them? So the younger Taiwanese tend to lean more towards the DPP, historically. They tend to, in polls, they tend to identify as, I'm Taiwanese only. Okay. Rather, very few of them will say I'm Chinese only. Okay. More of them will, an increasing number will say that I'm Taiwanese only, although many will say I'm both Taiwanese and Chinese. Okay. Chinese in the sense of culturally, civilizationally Chinese, not Chinese in the sense of People's Republic of China, Chinese.

26:43And I think these dynamics are affected by what the mainland does. China is, I think, perfectly happy, Xi Jinping would be perfectly happy if Taiwan would sign a piece of paper that says, I accept one country, two systems, Taiwan plan, which is to say, I accept your principle that there's only one China and we're part of it and you're the legitimate leaders. And we will get a Hong Kong style arrangement where we get to keep our laws, our institutions, our democracy. We get some freedom of expression, freedom to organize. We get our fancy passports that have visa free access to all these countries, all these perks.

27:19And maybe Beijing will give them free energies, other subsidies, other perks. That is the offer that's on the table for Taiwan. But it's become a whole lot less attractive now that Taiwan has watched what happened to Hong Kong, because Hong Kong took that deal. And it was all right until people in Hong Kong started to object to the CCP's encroachment on their institutions and their freedom to organize and speak out. And what ended up happening is Xi Jinping sent in masked thugs that brutalized people, rounded them up, disappeared people in the night, terrorized the population and crushed them into submission.

27:57So I think Taiwan has understood since 2019 that if they take one country, two systems, it's the slow beginning of the end of their democratic institutions and their freedom. It is not a deal that they would take, I think, willingly. But if they feel that the United States and the rest of the world isn't backing them up and they're offered, Beijing essentially says, you want to do this the easy way or the hard way, I can imagine a world in which they choose the easy way. And this matters because we're not just talking about peacetime. We're also talking about crisis scenarios. There's all kinds of things that China can do to dial up the pressure.

28:37They can mobilize their forces in the Taiwan Strait for a potential invasion. Oh, it's just an exercise. It's just an exercise. until it's not. They can start to curtail the flow of goods and planes coming to and from Taiwan. They can start to ask for manifests. Who's on the plane? Oh, so sorry, Ike is on the plane. Could you make a pit stop in Shanghai? We want to ask him some questions. There's so many ways that Beijing can turn up the pressure. They probably have special forces, united front people on the ground in Taiwan. They can do cyber attacks against Taiwan critical infrastructure. They can blank the country with propaganda, the island rather with propaganda.

29:13There's so much things that China can do to put the pressure on and try to drive wedges between Taiwan, the United States and Japan. And in those moments, what is the US political strategy? Yeah, we have a military strategy if they turn to an invasion. But what is the political strategy if the markets start to panic, if we think we may need to get our American citizens out? And these are the scenarios I argue in the book that we haven't yet fully thought through. In your framework, what's been the big constraint on Xi Jinping so far historically? Like, why hasn't he done something on Taiwan yet?

29:47Well, we don't know. We have to speculate. One reason is that the People's Liberation Army, the PLA, I think it's fair to say up until recently, and probably still now, lacks the ability to take and hold Taiwan by force. Back in 1949, after Mao took over the mainland. The first thing he did was he told his generals, now give me the plan to take Taiwan. And they studied it and they concluded, sir, it can't be done. This is one of the hardest waterways in the world. There's crazy tides, there's enormous waves, there's 50 mile an hour winds, there's typhoons, there's fog. And there's only a few landing beaches that are plausible.

30:24And Taiwan knows what those are. And now they have spent the better part of a century fortifying them. So if you want to get all of your men across the strait, you have to deliver them by sea or by air. And air is difficult. As Ukraine has shown, it's easy to shoot down helicopters and planes. And so you need to take them in these amphibious ships, which can be sunk by mines or cheap drones or artillery. And then you have to get them into the shores. And then you potentially have to sustain them for a long period of time. You need to give them vehicles and ammo and fuel and food and medicine. And what happens if you successfully deliver 15 ,000 troops to the shores?

31:04And then your logistics tail gets cut because a number of your amphibious ships end up on the bottom of the Taiwan Strait. And then your men are massacred on the beaches. So many things have to go right in a highly synchronized way for an amphibious invasion to work. Such that D-Day, which is the great example in history where we had all these advantages that China wouldn't have today, came very, very close to going completely off the rails, as I discuss in the book. So Xi Jinping is systematically building the capabilities he would need. He's building out this amphibious fleet. He's building better anti-submarine warfare to force us back.

31:41He's building longer-range ballistic missiles that can target ships to force our aircraft carriers to stay further back from the conflict zone. He's building out his air force and drones, cyber tools, all these things to coerce Taiwan. But if he rolled the dice on an invasion today, I think at least if you look at the public war games, it is possible that he would suffer a pretty catastrophic defeat. So that's one reason for patience. But as his preparations proceed, I think he's getting more confident. So one of the things you used to hear a lot more, and I don't think you hear it nearly as much nowadays, but this idea of economic pain, right?

32:17If China invaded Taiwan, there would be some sort of retaliation, maybe sanctions, something like that. And because the CCP had built its legitimacy on the social compact with its population, which was basically, you know, we're in power and in exchange, you all hopefully get rich. That was just untenable for Xi Jinping and other policymakers. You don't hear that that much anymore. And I wonder why that is. Is it just because people feel that China has reached the level of economic development where, okay, the legitimacy has been established in terms of the social compact? Or is it because we had an example of Russia invading Ukraine and very obviously being willing to trade off that military action, even though it generated an enormous amount of economic pain for the country?

33:07It's a whole bunch of factors at once. Xi Jinping has overseen a transformation in the social contract in China. from development to ideology and national security. From the anti-corruption campaign to his ideological rectification campaigns to rewriting the history textbooks to taking Communist Party cadres to historical sites to study points of hardship in party history. Xi Jinping uses this term struggle to describe what the party should do. and he has told young people that can't find work that they should eat bitterness. The idea being you should tough it out. We are a nation striving for national rejuvenation.

33:52National rejuvenation means rising to the height of human achievement in every human endeavor. And to do that, we're going to work hard and we're going to make some sacrifices. And he has tightened surveillance. He has tightened discipline that allows him to run this regime according to a very different set of rules through coercion. And that means we have to assume that China's tolerance for economic pain has increased. Now, at some point, there's a limit. If the financial system were just to implode under the threat of sanctions or because there's just mass capital flight, because no investor wants to be stuck in illiquid assets in China if the U.S.

34:31and China are headed to war. Yes, it's possible that China could suffer a sudden black swan collapse. But I think that's not base case. And I have a work that I describe in a lot of detail in the book about how over the last 10 years, China has been systematically building shock absorbers into its financial system to make it more likely to survive the gut punch of the imposition of sanctions. And the fact that Russia's financial system, which lacked many of these advantages, was able to steady itself after the imposition of sanctions is, I think, an encouraging sign. Just a couple of numbers to bring this home.

35:11At the beginning of the Russia-Ukraine war, Russia was blindsided that the Europeans joined all the sanctions. They had moved a lot of their central bank assets from dollars into euros. And then the Europeans froze those assets, which meant suddenly half of their foreign exchange reserves were just inaccessible to them. That was a huge boo-boo for the Russians. And then the sanctions regime targeted Sparabank and other major banks in ways that had not been expected. So the ruble lost something like half its value in a couple of weeks. And there was a real risk of Russian collapse. But with only$300 billion of foreign exchange available, they were able to right the ship because they imposed capital control regime.

35:55They limited outflows from banks. They raised interest rates to 20%. They demanded that state enterprises take payments in rubles, all of these things to increase demand for rubles and keep the bank solvent. And then foreign hedge funds that had profited on the ruble short took a look at the situation, and they said, well, are there more sanctions coming? Well, if the answer is no, then it's all priced in, and the ruble looks pretty cheap, because actually Russia's imports have just collapsed, and their exports are booming because the oil price is up. And then in April of 2022, the ruble was the best performing currency in the world.

36:29And then the ship was set in and then the economic war became an attritional contest that we have not won yet. And I think there is a similar dynamic with China. There is some possibility that their financial system could implode. But China, if you count their shadow reserves, has between 10 and 20 times the FX that was available to Russia. They have an existing capital control regime. All the banks are run by the state. And if they survive that gut punch, they have the stockpiles to live on their own supply for many, many, many months if they're entirely cut off from imports. So the question is, if we can't defeat them economically slowly, how do we think about the long term contest of economic pain such that it is something that we as a coalition of democracies can possibly win?

37:16And the answer I come to in the book is we have to stop thinking about it as punishment. Stop thinking about it as how we could hurt China in a way that hurt us too. We need to think about what are the things that we would want to do in our own best interest in a crisis to secure our own economic interests that would just happen to hurt China as a byproduct.

37:47Tracy Alloway:Just real quickly on cutting off imports. Are they good on oil? We know they have this big oil stockpile. War would be extremely oil-intensive process. They've electrified a lot of cars. I doubt their military as nearly as electrified. I think they're good on oil. You think they're good on oil? In peacetime, they consume 13, 14 million barrels a day, of which around four are produced domestically. if they became cost insensitive, which they would be in a crisis, they could probably squeeze that up a bit. They also can import over land. They import a couple of million barrels a day over land. And if they had to, they could import more by land.

38:30Tracy Alloway:It wouldn't be comfortable. It wouldn't be cheap. But if they would have willingness to pay, they have plenty of foreign exchange. They could also do as the Nazis did, which is turn coal into fuel oil. Fisher Tropes has been done in the past. The Nazis declared war on all their oil suppliers, and they still managed to fight through 1945 pretty effectively. But there's more to this. They declare, what is it, 1.3 billion barrels in their SPR. They probably have something more like two. And then they can make the civilian economy ration. The PLA would use something like 500 ,000 barrels a day. So if you run the math, and I just do the back of the envelope in the book, what matters is not that they would run out of oil eventually.

39:09At some point, they would feel the squeeze. But our allies, Japan, South Korea, Taiwan, would feel the squeeze much faster. So our coalition, as currently set up, doesn't have the advantage in a long-term contest of extreme economic war. And it's not just about oil. It's about everything else. They have stockpiles of cotton. They have stockpiles of chips. They have stockpiles of everything plausible that they might need. Taiwan doesn't have that. Japan doesn't have that. So this is the risk that they take us up to the brink. We are forced to contemplate what the long term economic war looks like.

39:48We realize that if they can last for 12 months and we can last for three, that's not a game we want to play. And we fold. And then if that is established, they can coerce us. And this is not just about Taiwan. This goes far, far, far beyond Taiwan. This is about our entire alliance architecture in the region. And frankly, this is about our hemisphere too. One of the arguments you make in the book is this idea that a US policy response can't just be about military power. It has to be about economic power as well. And you talk about this idea of avalanche decoupling. So sort of forming a grand alliance with other democracies to try to isolate China from the global economy.

40:26And when I hear a term like avalanche decoupling, I kind of think like, well, So in some respects, the U.S. and maybe some other parts of the world have been trying to decouple from China for a long time with varied degrees of success. What convinces you that something like that would be possible in a crisis moment, especially when we're talking about, again, grand alliances with democracies that maybe under the Trump administration, we don't seem to have the best of relations with at the moment? It's a really important question. So let's take the hard facts head on. In the last couple of years, we have learned some very important things about what is and is not possible when it comes to breaking our critical dependencies on China.

41:08Everyone knows that we have these critical dependencies which strike at the very heart of our lives and livelihoods. We depend on China for the active pharmaceutical ingredients that save lives every day in hospitals. We depend China on the supply chain to build any drone in the United States. We depend China on China for legacy chips without which we can't make cars. There is no Ford. There is no Stellantis. I think that's crazy. I think it's crazy. I think it opens up the United States to economic blackmail. And frankly, the fact that our allies have the same dependencies opens them up to blackmail too.

41:46So it's a no-brainer that we should start to break these dependencies on China in the same way that China is trying to break its dependencies on us because they don't want to be blackmailed. So what is dangerous is that China would be able to de-risk their economy largely from ours, but we couldn't do that in a symmetrical way. But if a crisis happens over Taiwan, whether that's tomorrow or 18 months from now or five years from now, it will be an oh shoot, I guess we should have done all of that five years ago. But that will be yesterday's problem. And the question for today's problem is how do we deal with the situation we face?

42:23And it's very possible that that situation would be in the context of a crushing recession and stock market correction. because as we mentioned at the beginning of this conversation, the whole equity market is being held up by an AI trade where seven tech companies that are priced for perfection make up 40 % of the S &P. And if you take away the supply of chips, they fall to earth. $600 billion, is that the number that the hyperscalers are spending on data centers this year?

42:52Tracy Alloway:It's close enough. You take that away and the US economy is in recession. So imagine the context of a terrifying stock market correction and heading into recession. Let's assume that China has taken some actions that reveal that we really need to expand this de-risking or partial decoupling thing. But we've also learned that we can't decouple from China all at once because we tried this on Liberation Day and we got cold feet within a week because the bond market blew up. And all the captains of industry called up the president and said, you have to reverse this, Mr. President, or we're cooked.

43:28So if you can't decouple from China all at once and quickly, the only way to do it is gradually looking at the critical stuff first and the non-critical stuff later, if ever. So what I want to do is say, what is the most critical things if you have to stack rank our dependencies? What's 99th percentile? What's 90th? What's 70th? What's 50th? And then let's go down the list one at a time and figure out how do we break these dependencies. So in the event of a crisis, an invasion of Taiwan or a blockade of Taiwan or some gray zone, ambiguous thing, if we decide we need to reset this relationship and we need to decouple from China 5%, 10%, 30%, what does that actually entail?

44:12And I would submit that that's a much harder problem than we've realized. Because even if we want to decouple just a little bit, we face a transshipment problem. Right now, as we've discovered, you have a tariff differential on China. The tariff on China is here. The tariff on Vietnam, Mexico, everyone else is here. So companies will export their stuff from China to Vietnam or Mexico. They'll write made in Vietnam or Mexico on it, and they'll resend it to us. So if you don't develop a solution to this transshipment problem, there is no way that you can decouple from China, even a little bit, even in a crisis.

44:46That to me is very scary. And the process of working with other countries to address this, essentially this is rules of origin for trade. This is a big enterprise that is going to take years and years to do. It cannot be done right away. So what we're talking about with avalanche decoupling is a process that abandons the fiction that we can do this all at once and starts thinking about if we need to divorce China 10%, 30%, 60%, whatever it is, how do we go about building a new kind of economic order such that we can still have trading relations with the rest of the world? And that question has not been addressed until this book.

45:23Tracy Alloway:I find this conversation to be very alarming and, you know, obviously, and it should be very alarming. I guess the good news, if there is any, is that we have spent the last several years deepening our friendships with the rest of the world and building up our allies and establishing that open non-China trading bloc. At least, oh wait, no, we're literally doing the opposite. Well, I was going to say on the plus side, if one of the elements of China deterrence is building a better custom system where we can actually track trans shipments, then maybe some of that work has been done. It's better than building more nukes.

46:06Tracy Alloway:But it does seem like we're kind of not doing any of this, right? I mean, not only not doing any of this. Correct. We are like rowing. Like if the goal is let's do this avalanche recoupling around the world, et cetera, like we're going in the opposite direction. Yeah, that's exactly right. The only way you can get this stuff done is if you work with your partners. That's the only way. Yeah. And that's not about being moralistic. It's about practically speaking there's stuff that we don't know how to make in this country anymore. Yeah. Because we outsourced it two generations ago and there literally aren't any people left who know how it's done.

46:41And Japan or South Korea in particular, but many of our European partners too, have this know-how in advanced manufacturing. And not to partner with them, I think, is kind of crazy. Also, they face the same problems, the same risks of economic coercion by China. And they have even less leverage to push back against China because China, relatively speaking, is much bigger than they are. So I think the Trump administration has a few correct ideas dealing with those rules of origin through these bilateral deals, doing bilateral economic security pacts like with Japan. But we need to be bringing larger groups of allies and partners together to do this.

47:18Tracy Alloway:Just real quick, I think you mentioned at the beginning that you actually think currently in a conventional war that the American military would have the upper hand. But I don't – but like, you know, it looks like – I don't know what's going to go on with Iran. And I'm very susceptible. I watch all the Chinese propaganda. I watch the military parade. It's like, whew, that looks really impressive. The robot dogs and all this stuff. Oh, the robot dogs. Yeah, like – Terrified of the robot dogs. Can you just give it a short version of why as of April 21st, 2026, you think the U.S. military still has the upper hand?

47:51This is something I learned in the process of working on this book. And the previous book – there's a companion book called The Arsenal of Democracy. which is all of the military nuts and bolts that my editor was like, no way you're putting this in. That's too nerdy. But here's what I discovered in researching that book. The wars that America has fought over the last 80 years have been land wars. And land war has a certain character. And war at sea has a totally different character. And the basic reason is that war on land involves lots and lots and lots of units that are basically interchangeable.

48:27And so it's attritional. You're wearing each other down. You're fighting along a long line. You're applying pressure. And there's an equilibrium and a balance. And you're basically trying to hold up enough reserves with potential energy to punch through the enemy's line and then send in the cavalry and their line collapses and you ride to victory. So if you look at the maps of World War I, for example, the line doesn't move. It doesn't move. It doesn't move. It doesn't move. And then it breaks. War at sea is different. You have a very small number, a much smaller number of platforms, and they're much more specialized.

48:56And so if you can take out just one or two of the enemy's vessels, specialized aircraft, specialized ships, the whole structure starts to collapse and the rest become easier to kill. And that means that there's no real incentive to hold back reserves. Once the engagement starts, it's incredibly intense and it's often decided in the first hours to days. And one significant implication of that is your ability to see and communicate across the battle space is really, really critical. And especially as the range of our missiles and our drones has increased, that means that U.S. aircraft and ships and submarines that could potentially strike targets in or around China can be zooming around across literally millions of square miles of ocean.

49:45So to see these things, to target them, and then to deliver mass to a target to kill them is no easy feat. And if the U.S. can use cyber, counter space capabilities, and so on, to disrupt China's ability to see and communicate in those critical early hours, then it could potentially win a lopsided victory or vice versa. And one of the implications of that is if you're just counting ships or counting planes or missiles, you will miss the parts of the balance that are most important, that are actually qualitative, many of which can be augmented with AI. And this is hard because it means when you're wargaming these things, if you don't have a clearance, you kind of have to make it up with these capabilities.

50:26We don't know what the cutting edge of cyber is, for example. Only a very small compartmented group of people within the national security establishment know all of the relevant capabilities. But I just think that if China believed that they could defeat the U.S. in a high-end war, they would be behaving more assertively. They would be operating not just in the Taiwan Strait but all around the region in a way that they're not yet. We started this conversation talking about the famous hypothetical blockades in geopolitics and international relations classrooms around the world. What's your big takeaway from the Strait of Hormuz situation as it applies potentially to China and Taiwan?

51:04It's a good wrap up for the conversation, really. The United States military has these godlike capabilities with special forces, with cyber, electronic warfare, in some senses the way our air defenses have performed, which is exceptionally, exceptionally well. But while our military is very good at doing the operational military stuff, we are not succeeding at the strategic level because ultimately war is the continuation of politics by other means. And our politics is susceptible to economic pressure in a way that our adversaries is not. And if we don't get the message, if we don't take the wake-up call and start working on our economic resilience and our credible ability to bear economic pain and supply chain disruptions and the rest, we will be unprepared on exam day.

51:56Because China has so many more capabilities to impose economic pain on us and to micro-calibrate the character of that economic pain than Iran does. and they have more ability to do it for a long period of time in multiple theaters and parts of the world. And we can only deal with this problem if we treat it as an all-of-government interdepartmental problem, not just a military problem, and if we work with allies, and if we try to make some kind of bipartisan consensus that national economic resilience matters. That, to me, is the lesson of Hormuz. All right. On that cheerful note, Ike Freiman, thank you so much for coming on All Thoughts, and the book is Is Defending Taiwan a Strategy to Prevent War with China?

52:36Really appreciate it. Thanks so much for having me on.

52:39Tracy Alloway:Thanks so much, Ike. That was great.

52:53Joe, that was a fascinating conversation. And I haven't read the entire book, but I did flip through it and I do recommend it. It's super interesting. There's also like some really interesting appendices with speeches from various Taiwanese officials. Yeah, I'm going to have to. Yeah, it's definitely worth reading. One of the things that stood out there was this. I mean, towards the end of the conversation, when we were talking about the possibility of like, how do you build up economic resilience that requires the participation of other economies at the same time that the Trump administration seems to be pushing a lot of those other economies and strategic alliances further away?

53:29Tracy Alloway:You know, so we didn't get into this, but obviously, OK, like we don't like the stock market. It falls a couple percent and suddenly we get cold feet. OK, that's economic resilience. I think there's another issue which we didn't get into, which is political appetite for war, especially after the Iraq war is diminished. The current war in Iran is not popular, pretty clearly, regardless of whether it's wise or regardless of how serious the economic toll is. And so I think another interesting and important dimension here is look around and I'd be curious how many – okay, we can sit here and make the argument, look, we really need chips or we need to defend this principle, whatever, et cetera.

54:19Tracy Alloway:Is there really the domestic political appetite for massive conflict, et cetera? I don't really know. Even beyond the economic question, does the appetite exist? But I really enjoyed that conversation. It was certainly very interesting hearing him, for example, walk through the math of how much oil China has and how much it would be able to – how long it would be able to go with its existing stockpiles. And it does seem right, this question of whether there will ever be some sort of serious change to the China-Taiwan relationship, et cetera, it's a complicated one on many dimensions, as he said in the beginning.

55:01Tracy Alloway:Yes. Almost almost one of the most complicated questions there is. Oh, absolutely. There's also a fundamental tension between, you know, the U.S. building out its chips resilience while deterring China from doing something in Taiwan. If the U.S. actually manages to be successful in building domestic capacity, chips capacity, then that like the silicone shield that's protected Taiwan gets weaker and weaker. Right. We have to start paying attention to the upcoming Taiwanese election and start wondering whether the government in Taiwan will continue to be enthusiastic about the idea of the U.S. building up chip capacity.

55:39Tracy Alloway:This is a new dimension of international relations and so forth that we have to key in on. You just want to go to Taiwan. Well, you know what the one thing I will say is I do want to go to Taiwan. But the one thing I will say is I always want to learn more about the domestic policy of other countries, because I do think it's very easy to look at the U.S. and say, OK, here I know a fair amount about American domestic policy. And then you hear about like and here's Taiwan's policy. Here's Iran's policy. Here's Israel's policy. Here's Korea's policy. As if there is just one policy or it's just there is just this one unified thing.

56:14Tracy Alloway:And I think it's important to remember that all these countries have domestic politics, just like the United States does. And disagreements and nuances and all of that. Yep, absolutely. Shall we leave it there? Let's leave it there. This has been another episode of the All Thoughts Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Joe Weisenthal. You can follow me at The Stalwart. Follow our guest, Ike Fryman. He's at Ike Fryman. Follow our producers, Carmen Rodriguez at CarmenArmin, Dashiell Bennett at Dashbot,

56:44Tracy Alloway:And for more Odd Lots content, go to Bloomberg.com slash Odd Lots. We have a daily newsletter on all of our episodes. And you can chat about all these topics 24-7 in our Discord, discord.gg slash Odd Lots. And if you enjoy Odd Lots, if you want us to take a trip to Taiwan, 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.

57:38Thank you.

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