The High Cost of Miscalculation: Sean Stein on U.S.-China Trade Fallout

The High Cost of Miscalculation: Sean Stein on U.S.-China Trade Fallout

In a keynote address during the 2025 SCCEI China Conference, U.S.-China Business Council President Sean Stein cautioned that strategic miscalculations and trade tensions have left the U.S. economy with lasting setbacks—and few clear gains.
Sean Stein addresses the audience during a keynote speech with Scott Rozelle seated at a table as moderator. Rod Searcey

Against a backdrop of heightened geopolitical tension and economic uncertainty, Sean Stein, President of the U.S.-China Business Council, delivered a keynote address on May 14 during the second annual China Conference organized by the Stanford Center on China’s Economy and Institutions (SCCEI).

Speaking to an audience of faculty, students, and policy experts, Stein offered a grounded and pragmatic assessment of the evolving U.S.-China relationship, emphasizing the enduring importance of commercial engagement and the need for clear-eyed policymaking in a time of strategic rivalry.

Costly Miscalculations
Stein began by highlighting how U.S. policy makers have misjudged the resilience and retaliatory capacity of the Chinese economy. In particular, he argued that in response to the minimal impact China’s retaliatory efforts had on the U.S. economy during Trump’s first administration, the U.S. underestimated both China’s pain threshold and the pain China can inflict on the U.S. economy, while also overestimating its own leverage. The result, he noted, was an awkward U.S. climbdown on tariffs and significant disruption to the U.S. economy without meaningful strategic gain.

“We’re getting all of the downsides of tariffs and trade wars without getting any of the upside,” Stein remarked. Many U.S.-based companies, faced with soaring costs for component parts sourced from China, were forced to move production to third countries—decisions that are likely irreversible. Stein questioned, “Is some of the damage permanent? Yeah…sometimes, when some manufacturing leaves, it doesn't come back,” which is the exact opposite of what the Trump administration hoped would result from the newly imposed tariffs.

We’re getting all of the downsides of tariffs and trade wars without getting any of the upside.
Sean Stein

Urgent Rethink Needed on U.S-China Trade and Technological Competition
Stein also pushed back against long-held assumptions that the U.S. market alone can dictate global business trends. The notion that “the only market that matters is the U.S. market” no longer holds, noting that Chinese consumers and innovation ecosystems now play a decisive role in shaping product development and global supply chains. He noted that European businesses have expressed a radical shift in strategy, they said, “we've been in China for Asia, in North America, for the Americas…We're now going from that model to what could very well become an, ‘in China for China and the world minus one.’ And the minus one is, of course, the U.S. market.”

On the technology front, he offered a candid evaluation of the U.S.-China competition. Stein reflected on the current state of artificial intelligence in China and the U.S., he said, “ at the end of the day it's not who has the best model; a good enough model is a good enough model, where it really makes a difference is in the application…and I see China racing ahead in the application of AI.” 

At the end of the day it's not who has the best model, where it really makes a difference is in the application. I see China racing ahead in the application of AI.
Sean Stein

Know Your Competitor
Stein concluded with a call for more measured and constructive engagement. He urged both Washington and Beijing to establish clearer rules of the road, maintain open lines of communication, and invest in policy solutions that reduce uncertainty rather than amplify it.

Stein’s keynote offered a business-grounded counterpoint to prevailing narratives of decoupling and confrontation. His insights reinforced the importance of understanding the full complexity of economic interdependence, as well as China’s capacity for global market disruption, and the costs of miscalculation. As part of the broader SCCEI China Conference, his remarks served as a reminder that if America does not properly understand its competitor, efforts to stay ahead may well backfire and erode U.S. strength and global standing. 



A full recording of Sean Stein’s keynote is available on YouTube and below.

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